C.2 Financial statements

Financial Statements For the Year Ended 30 June 2016

Health Directorate

Independent Audit Report

[Insert the Report from the ACT Audit Office.]

 

Statement of Responsibility

In my opinion, the financial statements are in agreement with the Health Directorate’s (the Directorate’s) accounts and records and fairly reflect the financial operations of the Directorate for the year ended 30 June 2016 and the financial position of the Directorate on that date.

Ms Nicole Feely signature

Ms Nicole Feely

Director-General

Health Directorate

19 September 2016

 

Statement by the Chief Finance Officer

In my opinion, the financial statements have been prepared in accordance with generally accepted accounting principles, and are in agreement with the Health Directorate’s (the Directorate’s) accounts and records and fairly reflect the financial operations of the Directorate for the year ended 30 June 2016 and the financial position of the Directorate on that date.

Mr Trevor Vivian

Chief Finance Officer

Health Directorate

September 2016

 

Health Directorate

Controlled Financial Statements for the Year Ending 30 June 2016

  Note
No.
Actual
2016
$'000
Original
Budget
2016
$'000
Actual
2015
$'000
Income
Revenue
Government Payment for Outputs 4 272,366 264,857 252,617
User Charges - ACT Government 5 812,921 812,060 761,784
User Charges - Non-ACT Government 5 124,780 107,722 107,824
Interest 6 77 93 70
Distribution from Investments with the Territory Banking Account 7 64 98 97
Resources Received Free of Charge 8 1,743 1,708 1,471
Other Revenue 9 19,053 20,136 19,760
Total Revenue   1,231,004 1,206,674 1,143,623
Gains
Gains on Investments 10 - - 12
Other Gains 11 1,681 871 7,068
Total Gains   1,681 871 7,080
Total Income   1,232,685 1,207,545 1,150,703
Expenses
Employee Expenses 12 694,737 683,043 643,111
Superannuation Expenses 13 85,571 81,444 81,043
Supplies and Services 14 360,359 346,359 323,871
Depreciation and Amortisation 15 42,968 39,794 46,586
Grants and Purchased Services 16 89,823 85,269 78,343
Borrowing Costs 17 44 401 305
Cost of Goods Sold 18 9,000 11,237 9,295
Other Expenses 19 12,520 6,171 12,779
Total Expenses   1,295,021 1,253,718 1,195,333
Operating (Deficit)   (62,336) (46,173) (44,630)
Other Comprehensive Income        
Items that will not be reclassified subsequently to profit or loss
Increase/(Decrease) in the Asset Revaluation Surplus 36 1,604 - (90)
Total Comprehensive (Deficit)   (60,732) (46,173) (44,720)

 

The above Operating Statement is to be read in conjunction with the accompanying notes.  The Directorate has only one output class and as such the above Operating Statement is also the Directorate's Operating Statement for the Health and Community Care Output Class.

 

  Note
No.
Actual
2016
$'000
Original
Budget
2016
$'000
Actual
2015
$'000
Current Assets        
Cash and Cash Equivalents 23 106,575 60,743 105,069
Investments   - 3,015 -
Receivables 24 38,761 29,591 27,232
Inventories 25 10,106 8,207 8,655
Assets Held for Sale   - 29 -
Other Assets 30 4,004 4,643 3,939
Total Current Assets   159,446 106,228 144,895
Non-Current Assets        
Investments 26 3,019 - 3,027
Property, Plant and Equipment 27 944,756 963,999 886,129
Intangible Assets 28 28,148 40,694 22,583
Capital Works in Progress 29 168,175 205,994 131,756
Total Non-Current Assets   1,144,098 1,210,687 1,043,495
Total Assets   1,303,544 1,316,915 1,188,390
Current Liabilities        
Payables 31 91,654 43,048 54,269
Borrowings 32 352 - -
Finance Leases   - 2,356 -
Employee Benefits 34 224,073 212,696 229,506
Other Liabilities 35 252 923 370
Total Current Liabilities   316,331 259,023 284,145
Non-Current Liabilities        
Borrowings 32 2,919 - -
Finance Leases   - 4,242 -
Employee Benefits 34 16,966 18,168 14,529
Other Provisions 33 1,462 1,375 1,418
Total Non-Current Liabilities   21,347 23,785 15,947
Total Liabilities   337,678 282,808 300,092
Net Assets   965,866 1,034,107 888,298
Equity        
Accumulated Funds   834,834 904,589 758,870
Asset Revaluation Surplus 36 131,032 129,518 129,428
Total Equity   965,866 1,034,107 888,298

 

The above Balance Sheet is to be read in conjunction with the accompanying notes.  The Directorate has only one output class and as such the above Balance Sheet is also the Directorate's Balance Sheet for the Health and Community Care Output Class.

  Note
No.
Accumulated
Funds
Actual
2016
$'000
Asset
Revaluation
Surplus
Actual
2016
$'000
Total
Equity
Actual
2016
$'000
Original
Budget
2016
$'000
Balance at 1 July 2015   758,870 129,428 888,298 914,133
Comprehensive Income
Operating (Deficit)   (62,336) - (62,336) (46,173)
Increase in the Asset Revaluation Surplus 36 - 1,604 1,604 -
Total Comprehensive (Deficit)/Surplus   (62,336) 1,604 (60,732) (46,173)
Transactions Involving Owners Affecting Accumulated Funds          
Capital Injections   138,299 - 138,299 166,147
Total Transactions Involving Owners Affecting Accumulated Funds   138,299 - 138,299 166,147
Balance at 30 June 2016   834,834 131,032 965,866 1,034,107
The above Statement of Changes in Equity is to be read in conjunction with the accompanying notes.

 

  Note
No.
Accumulated
Funds
Actual
2015
$'000
Asset
Revaluation
Surplus
Actual
2015
$'000
Total
Equity
Actual
2015
$'000
Balance at 1 July 2014   756,459 129,518 885,977
Comprehensive Income        
Operating (Deficit)   (44,630) - (44,630)
(Decrease) in the Asset Revaluation Surplus 36 - 90) (90)
Total Comprehensive (Deficit)   (44,630) (90) (44,720)
Transactions Involving Owners Affecting Accumulated Funds        
Capital Injections   74,041 - 74,041
Capital (Distributions)   (27,000) - (27,000)
Total Transactions Involving Owners Affecting Accumulated Funds   47,041 - 47,041
Balance at 30 June 2015   758,870 129,428 888,298
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.

 

  Note
No.
Actual
2016
$'000
Original
Budget
2016
$'000
Actual
2015
$'000
Cash Flows from Operating Activities        
Receipts
Government Payment for Outputs   272,366 264,857 252,617
User Charges – ACT Government   807,192 812,060 760,881
User Charges – Non-ACT Government   115,766 105,000 105,233
Grants Received from the Commonwealth   3,995 3,951 4,805
Interest Received   77 93 70
Distribution from Investments with the Territory Banking Account   64 98

 

104

Goods and Services Tax Input Tax Credits from the Australian Taxation Office   46,843 49,100 39,346
Goods and Services Tax Collected from Customers   4,996 4,300 4,590
Other   21,429 17,036 15,573
Total Receipts from Operating Activities   1,272,728 1,256,495 1,183,219
Payments        
Employee   698,717 664,802 621,323
Superannuation   85,571 81,444 80,761
Supplies and Services   348,128 349,084 318,270
Grants and Purchased Services   89,823 85,269 78,343
Goods and Services Tax Paid to Suppliers   51,724 46,768 43,826
Borrowing Costs   44 401 305
Other   13,460 21,432 13,237
Total Payments from Operating Activities   1,287,467 1,249,200 1,156,065
Net Cash (Outflows)/Inflows from Operating Activities 40 (14,739) 7,295 27,154
Cash Flows from Investing Activities        
Receipts        
Proceeds from the Sale of Property, Plant and Equipment   64 - 1,131
Total Receipts from Investing Activities   64 - 1,131
Payments        
Payments for Property, Plant and Equipment   11,179 9,381 8,915
Payments for Capital Works   114,209 166,147 66,894
Total Payment from Investing Activities   125,388 175,528 75,809
Net Cash (Outflows) from Investing Activities   (125,324) (175,528) (74,678)
Cash Flows from Financing Activities
Receipts
Capital Injections   138,299 166,147 74,041
Proceeds from Borrowings   3,319 - -
Total Receipts from Financing Activities   141,618 166,147 74,041
Payments        
Repayment of Finance Lease Liabilities   - 1,452 1,703
Repayment of Borrowings   48 - -
Capital Distributions   - - 27,000
Total Payment from Financing Activities   48 1,452 28,703
Net Cash Inflows from Financing Activities   141,570 164,695 45,338
Net Increase/(Decrease) in Cash and Cash Equivalents   1,506 (3,538) (2,187)
Cash and Cash Equivalents at the Beginning of the Reporting Period   105,069 64,281 107,256
Cash and Cash Equivalents at the End of the Reporting Period 40 106,575 60,743 105,069
The above Cash Flow Statement is to be read in conjunction with the accompanying notes.

 

Health Directorate Controlled Statement of Appropriation for the Year Ended 30 June 2016
  Original
Budget
2016
$'000
Total
Appropriated
2016
$'000
Appropriation
Drawn
2016
$'000
Appropriation
Drawn
2015
$'000
Controlled
Government Payment for Outputs 264,857 277,703 272,366 252,617
Capital Injections 166,147 158,504 138,299 74,041
Total Controlled Appropriation 431,004 436,207 410,665 326,658
The above Controlled Statement of Appropriation should be read in conjunction with the accompanying notes.

Column Heading Explanations

The Original Budget column shows the amounts that appear in the Cash Flow Statement in the Budget Papers. This amount also appears in the Cash Flow Statement.

The Total Appropriated column is inclusive of all appropriation variations occurring after the Original Budget.

The Appropriation Drawn is the total amount of appropriation received by the Directorate during the reporting period. This amount appears in the Cash Flow Statement.

Variances between ‘Original Budget’ and ‘Total Appropriated’

Government Payment for Outputs

The difference between the Original Budget and Total Appropriated is due to a transfer of $11.9 million from Capital Injections to Government Payment for Outputs for the Directorate’s new initiative to improve operational efficiency (System Innovation Program) and Commonwealth funding of $0.946 million from delayed 2014-15 programs.

Capital Injections

The difference between the Original Budget and Total Appropriated is due to a transfer of $11.9 million from Capital Injections to Government Payment for Outputs for the System Innovation Program. This is partially offset by a transfer of unspent 2014-15 funding to 2015-16 of $4.657 million relating to:

  • computer software development projects;
  • capital upgrade program works mainly for buildings, electrical and fire safety;
  • essential infrastructure works at the Canberra Hospital campus such as replacement of generators, switchboard, electrical substation; and
  • associated capital works for CT scanner replacements.

Variances between ‘Total Appropriated’ and ‘Appropriation Drawn’

Government Payment for Outputs

The difference between the Total Appropriated and Appropriation Drawn is a result of delays to:

  • the System Innovation Program ($4.101 million); and
  • Commonwealth-funded programs ($1.236 million), mainly relating to the purchase of vaccines.

Capital Injections

The difference between the Total Appropriated and Appropriation Drawn is due to the delay of projects resulting in deferral of Capital Injections from 2015-16 to 2016-17, 2017-18 and 2018-19. The major delays relate to:

  • construction of the Secure Mental Health Unit due to higher rainfall than average;
  • computer software development projects relating to systems used in operations of the Directorate, due mainly to lengthy contract negotiations;
  • infrastructure and redevelopment works across the Canberra Hospital campus; and
  • ACT Health’s capital upgrade program which includes building upgrades, electrical, fire and safety upgrades as well as mechanical and services infrastructure upgrades.

 

Health Directorate Controlled Note Index for the Year Ended 30 June 2016
Note 1 Objectives of the Health Directorate  
Note 2 Significant Accounting Policies  
Note 3 Change in Accounting Policy and Accounting Estimates, and Correction of Prior Period Errors  
Income Notes  
Note 4 Government Payment for Outputs  
Note 5 User Charges for Goods and Services  
Note 6 Interest  
Note 7 Distribution from Investments with the Territory Banking Account  
Note 8 Resources Received Free of Charge  
Note 9 Other Revenue  
Note 10 Gains on Investments  
Note 11 Other Gains  
Expense Notes  
Note 12 Employee Expenses  
Note 13 Superannuation Expenses  
Note 14 Supplies and Services  
Note 15 Depreciation and Amortisation  
Note 16 Grants and Purchased Services  
Note 17 Borrowing Costs  
Note 18 Cost of Goods Sold  
Note 19 Other Expenses  
Note 20 Waivers, Impairment Losses and Write-Offs  
Note 21 Act of Grace Payments  
Note 22 Auditor's Remuneration  
Asset Notes  
Note 23 Cash and Cash Equivalents  
Note 24 Receivables  
Note 25 Inventories  
Note 26 Investments  
Note 27 Property, Plant and Equipment  
Note 28 Intangible Assets  
Note 29 Capital Works in Progress  
Note 30 Other Assets  
Liability Notes  
Note 31 Payables  
Note 32 Borrowings  
Note 33 Other Provisions  
Note 34 Employee Benefits  
Note 35 Other Liabilities  
Equity Note  
Note 36 Equity  
Other Notes  
Note 37 Financial Instruments  
Note 38 Commitments  
Note 39 Contingent Liabilities and Contingent Assets  
Note 40 Cash Flow Reconciliation  
Note 41 Events Occurring after Balance Date  
Note 42 Third Party Monies  
Note 43 Budgetary Reporting - Explanation of Major Variances Between Actual Amounts and Original Budget Amounts  

 

Health Directorate Notes to and Forming Part of the Financial Statements for the Year Ended 30 June 2016

NOTE 1. Objectives of the Health Directorate

Operations and Principal Activities

The Health Directorate (the Directorate) partners with the community and consumers for better health outcomes by:

  • delivering patient and family centred care;
  • strengthening partnerships;
  • promoting good health and wellbeing;
  • improving access to appropriate healthcare; and
  • having robust safety and quality systems.

The Directorate aims for sustainability and improved efficiency in the use of resources, by designing sustainable services to deliver outcomes efficiently, and embedding a culture of research and innovation.

The Directorate continues to strengthen clinical governance of its processes, and strives to be accountable to both the government and community.

The Directorate aims to support its people and strengthen teams, by helping staff to reach their potential, promoting a learning culture and providing high-level leadership.

Note 2. Significant Accounting Policies

(a) Basis of Preparation

The Financial Management Act 1996 (FMA) requires the preparation of annual financial statements for ACT Government Agencies.

The FMA and the Financial Management Guidelines issued under the Act, requires the Health Directorate’s (the Directorate’s) financial statements to include:

  1. an Operating Statement for the reporting period;
  2. a Balance Sheet at the end of the reporting period;
  3. a Statement of Changes in Equity for the reporting period;
  4. a Cash Flow Statement for the reporting period;
  5. a Statement of Appropriation for the reporting period;
  6. the significant accounting policies adopted for the reporting period; and
  7. such other statements as are necessary to fairly reflect the financial operations of the Directorate during the reporting period and its financial position at the end of the reporting period.

These general-purpose financial statements have been prepared to comply with ‘Generally Accepted Accounting Principles’ (GAAP) as required by the FMA. The financial statements have been prepared in accordance with:

  1. Australian Accounting Standards; and
  2. ACT Accounting and Disclosure Policies.

At 30 June 2016, the Directorate’s current liabilities ($316.3 million) exceeded its current assets ($159.4 million) by $156.9 million. However, this is not considered to be a liquidity risk as its cash needs are funded through appropriation by the ACT Government on a cash-needs basis.

The financial statements have been prepared using the accrual basis of accounting, which recognises the effects of transactions and events when they occur. The financial statements have also been prepared according to the historical cost convention, except for assets such as those included in assets held for sale, property, plant and equipment and financial instruments which were valued at fair value in accordance with the (re)valuation policies applicable to the Directorate during the reporting period.

These financial statements are presented in Australian dollars, which is the Directorate’s functional currency.

The Directorate is an individual reporting entity.

Note 2. Significant Accounting Policies (Continued)

(b) Controlled and Territorial Items

The Directorate produces Controlled and Territorial financial statements. The Controlled financial statements include income, expenses, assets and liabilities over which the Directorate has control. The Territorial financial statements include income, expenses, assets and liabilities that the Directorate administers on behalf of the ACT Government, but does not control.

The purpose of the distinction between Controlled and Territorial is to enable an assessment of the Directorate’s performance against the decisions it has made in relation to the resources it controls, while maintaining accountability for all resources under its responsibility.

The basis of preparation described in Note 2(a) above applies to both Controlled and Territorial financial statements except where specified otherwise.

(c) The Reporting Period

These financial statements state the financial performance, changes in equity and cash flows of the Directorate for the year ending 30 June 2016 and the financial position of the Directorate at 30 June 2016.

(d) Comparative Figures

Budget Figures

To facilitate a comparison with the Budget Papers, as required by the Financial Management Act 1996, budget information for 2015-16 has been presented in the financial statements. Budget numbers in the financial statements are the original budget numbers that appear in the Budget Papers.

Prior Year Comparatives

Comparative information has been disclosed in respect of the previous period for amounts reported in the financial statements, except where an Australian Accounting Standard does not require comparative information to be disclosed.

Where the presentation or classification of items in the financial statements is amended, the comparative amounts have been reclassified where practical. Where a reclassification has occurred, the nature, amount and reason for the reclassification is provided.

(e) Rounding

All amounts in the financial statements have been rounded to the nearest thousand dollars ($’000). Use of the “-” symbol represents zero amounts or amounts rounded down to zero.

(f) Revenue Recognition

Revenue is recognised at the fair value of the consideration received or receivable in the Operating Statement. In addition, the following criteria must be met before revenue is recognised:

Government Payment for Outputs

Government Payment for Outputs and Payment for Expenses on Behalf of the Territory are recognised as revenue when the Directorate gains control over the funding. Control over these appropriated funds is obtained on the receipt of cash.

Note 2. Significant Accounting Policies (Continued)

(f) Revenue Recognition (Continued)

ACT Government User Charges

The Directorate receives funding from the Local Hospital Network Directorate (LHN). The funding received from the LHN is based on the historical costs of the Directorate adjusted for growth in services provided and inflation. Funding from the LHN is recognised as revenue when the Directorate gains control over the funding. Control over LHN funding is obtained on the receipt of cash.

Service Revenue

Revenue from the rendering of services is recognised when the stage of completion of the transaction at the reporting date can be measured reliably and the costs of rendering those services can be measured reliably.

Inventory Sales

Revenue from inventory sales is recognised as revenue when the significant risks and rewards of ownership of the goods has transferred to the buyer, the Directorate retains neither continuing managerial involvement nor effective control over the goods sold and the costs incurred in respect of the transaction can be measured reliably.

Amounts Received for Highly Specialised Drugs

Revenue from the supply of highly specialised drugs is recognised as revenue when the drugs have been supplied to the patients.

Inpatient Fees

For the hospital treatment of chargeable patients, inpatient fees are recognised as revenue when the services have been provided.

Revenue related to hospital services provided to the Department of Veterans Affairs patients is recognised when the number of patients and complexities of the treatments provided can be measured reliably and the contract price for such services is agreed with the Department of Veterans Affairs. Actual patient numbers and services are settled following an acquittal process undertaken in subsequent years and variations to the revenue recognised are accounted for in the year of settlement with the Department of Veterans Affairs.

Facilities Fees

Facilities fees are generated from the provision of facilities to enable specialists and senior specialists to exercise rights of private practice in the treatment of chargeable patients at a Health Directorate facility. They are recognised as revenue when the amount of revenue can be measured reliably.

Distribution

Distribution revenue is received from investments with the Territory Banking Account. This is recognised on an accrual basis.

Grants

Grants are non-reciprocal in nature and are recognised as revenue in the reporting period in which the Directorate obtains control over them.

Where grants are reciprocal in nature, the revenue is recognised over the term of the funding arrangements.

Interest

Interest revenue is recognised using the effective interest method.

Revenue Received in Advance

Revenue received in advance is recognised as a liability if there is a present obligation to return the funds received, otherwise all are recorded as revenue.

(g) Resources Received and Provided Free of Charge

Resources received free of charge are recorded as a revenue and expense in the Operating Statement at fair value. The revenue is separately disclosed under resources received free of charge, with the expense being recorded in the line item to which it relates. Goods and services received free of charge from ACT Government agencies are recorded as resources received free of charge, whereas goods and services received free of charge from entities external to the ACT Government are recorded as donations. Services that are received free of charge are only recorded in the Operating Statement if they can be reliably measured and would have been purchased if not provided to the Directorate free of charge.

Resources provided free of charge are recorded at their fair value in the expense line items to which they relate.

(h) Repairs and Maintenance

The Directorate undertakes major cyclical maintenance on its assets. Where the maintenance leads to an upgrade of the asset, and increases the service potential of the existing asset, the cost is capitalised. Maintenance expenses which do not increase the service potential of the asset are expensed.

(i) Borrowing Costs

Borrowing costs are expensed in the reporting period in which they are incurred.

(j) Waivers of Debt

Debts that are waived under Section 131 of the FMA are expensed during the year in which the right to payment was waived. Further details of waivers are disclosed at Note 20: Waivers, Impairment Losses and Write-offs.

(k) Current and Non-Current Items

Assets and liabilities are classified as current or non-current in the Balance Sheet and in the relevant notes. Assets are classified as current where they are expected to be realised within 12 months after the reporting date. Liabilities are classified as current when they are due to be settled within 12 months after the reporting date or the Directorate does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

Assets or liabilities which do not fall within the current classification are classified as non-current.

(l) Impairment of Assets

The Directorate assesses, at each reporting date, whether there is any indication that an asset may be impaired. Assets are also reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. However, intangible assets that are not yet available for use are tested annually for impairment regardless of whether there is an indication of impairment, or more frequently if events or circumstances indicate they might be impaired.

Any resulting impairment losses for land, buildings and leasehold improvements are recognised as a decrease in the Asset Revaluation Surplus relating to these classes of assets. Where the impairment loss is greater than the balance in the Asset Revaluation Surplus for the relevant class of asset, the difference is expensed in the Operating Statement.

Impairment losses for plant and equipment and intangible assets are recognised in the Operating Statement, as plant and equipment and intangibles are carried at cost. The carrying amount of the asset is reduced to its recoverable amount.

Non-financial assets that have previously been impaired are reviewed for possible reversal of impairment at each reporting date.

(m) Cash and Cash Equivalents

Cash and cash equivalents include cash at bank, cash on hand and cash held in the Territory Banking Account. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(n) Receivables

Accounts receivable (including trade receivables and other trade receivables) are initially recognised at fair value and are subsequently measured at amortised cost, with any adjustments to the carrying amount being recorded in the Operating Statement.

The allowance for impairment losses represents the amount of trade receivables and other trade receivables the Directorate estimates will not be repaid. The allowance for impairment losses is based on objective evidence and a review of overdue balances. The Directorate considers the following is objective evidence of impairment:

  • becoming aware of financial difficulties of debtors;
  • default payments; or
  • debts more than 90 days overdue.

The amount of the allowance is recognised in the Operating Statement. The allowance for impairment losses is written off against the allowance account when the Directorate ceases action to collect the debt when the cost to recover debt is more than the debt is worth.

(o) Investments

The Directorate holds one long-term investment. It is held with the Territory Banking Account in a unit trust called the Cash Enhanced Fund. Investments are measured at fair value with any adjustments to the carrying amount recorded in the Operating Statement. Fair value is based on an underlying pool of investments which have quoted market prices as at the reporting date.

(p) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost comprises the purchase price of inventories as well as transport, handling and other costs directly attributable to the acquisition of inventories. Trade discounts, rebates and similar items are deducted in determining the costs of purchase. The cost of inventories is assigned using the weighted average method.

Net realisable value is determined using the estimated sales proceeds less costs incurred in marketing, selling and distribution to customers.

(q) Assets Held for Sale

Assets held for sale are assets that are available for immediate sale in their present condition, and their sale is highly probable.

Assets held for sale are measured at the lower of the carrying amount and fair value less costs to sell. An impairment loss is recognised for any initial or subsequent write down of the asset to fair value less cost to sell. Assets held for sale are not depreciated.

(r) Acquisition and Recognition of Property, Plant and Equipment

Property, plant and equipment is initially recorded at cost.

Where property, plant and equipment is acquired at no cost, or minimal cost, cost is its fair value as at the date of acquisition. However, property, plant and equipment acquired at no cost or minimal cost as part of a Restructuring of Administrative Arrangements is measured at the transferor’s book value.

Where payment for property, plant and equipment is deferred beyond normal credit terms, the difference between its cash price equivalent and the total payment is measured as interest over the period of credit. The discount rate used to calculate the cash price equivalent is an asset specific rate.

Property, plant and equipment with a minimum value of $5,000 is capitalised.

(s) Measurement of Property, Plant and Equipment after Initial Recognition

Property, plant and equipment is valued using the cost or revaluation model of valuation. Land, buildings and leasehold improvements are measured at fair value. The Directorate measures its plant and equipment at cost.

Fair value for land and non-specialised buildings is measured using the market approach valuation technique and uses prices and other relevant information generated by market transactions involving identical or similar assets.

Fair value for specialised buildings and leasehold improvements is measured by reference to the cost of replacing the remaining future economic benefits embodied in the asset (i.e depreciated replacement cost). This is the cost approach valuation technique.

Land, buildings and leasehold improvements are revalued every 3 years. However, if at any time management considers that the carrying amount of an asset materially differs from its fair value, then the asset will be revalued regardless of when the last valuation took place. Any accumulated depreciation relating to buildings and leasehold improvements at the date of revaluation is written-back against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset.

(t) Intangible Assets

The Directorate’s intangible assets are comprised of internally developed software. Software is recognised and capitalised when:

  • it is probable that the expected future economic benefits that are attributable to the software will flow to the Directorate;
  • the cost of the software can be measured reliably; and
  • the acquisition cost is equal to or exceeds $50,000.

Internally generated software is recognised when it meets the general recognition criteria outlined above and where it also meets the specific recognition criteria relating to intangible assets arising from the development phase of an internal project.

Capitalised software has a finite useful life. Software is amortised on a straight-line basis over its useful life, over a period not exceeding 5 years.

Intangible assets are measured at cost.

(u) Depreciation and Amortisation of Non-Current Assets

Amortisation is used in relation to intangible assets and depreciation is applied to physical assets such as buildings and plant and equipment.

Land has an unlimited useful life and is therefore not depreciated.

Leasehold improvements are depreciated over the estimated useful life of each asset improvement, or the unexpired period of the relevant lease, whichever is shorter.

All depreciation is calculated after first deducting any residual values which remain for each asset.

Depreciation/amortisation for non-current assets is determined as follows:

Class of Asset Depreciation/Amortisation Method Useful Life (Years)
Buildings Straight Line 40-80
Leasehold Improvements Straight Line 2-10
Plant and Equipment Straight Line 2-20
Externally Purchased Intangibles Straight Line 2-5
Internally Generated Intangibles Straight Line 2-5

Land improvements are included with buildings.

The useful lives of all major assets held are reassessed on an annual basis.

(v) Payables

Payables are initially recognised at fair value based on the transaction cost and subsequent to initial recognition at amortised cost, with any adjustments to the carrying amount being recorded in the Operating Statement. All amounts are normally settled within 30 days after the invoice date.

Payables include Trade Payables, Accrued Expenses and Other Payables.

(w) Leases

Finance Leases

Finance leases are initially recognised as an asset and a liability at the lower of the fair value of the asset and the present value of the minimum lease payments each being determined at the inception of the lease. The rate used to calculate the present value of the minimum lease payments is the interest rate implicit in the lease. Assets under a finance lease are depreciated over the shorter of the asset’s useful life and lease term. Assets under a finance lease are depreciated on a straight-line basis. Depreciation is calculated after first deducting any residual values which remain for each asset. Each lease payment is allocated between interest expense and reduction of the lease liability. Lease liabilities are classified as current and non-current.

Operating Leases

Operating leases do not effectively transfer to the Directorate substantially all the risks and rewards incidental to ownership of the asset under an operating lease. Operating lease payments are recorded as an expense in the Operating Statement on a straight-line basis over the term of the lease.

Motor Vehicle Leasing Arrangements

Changes were made to the whole-of-government motor vehicle leasing arrangements with SG Fleet. As a result all such leases were classified as operating leases rather than finance leases from 23 April 2015. The leased vehicles held as Property, Plant and Equipment under the previous finance lease arrangement with SG Fleet were derecognised and the associated loss on the derecognition of the motor vehicles under a finance lease reflected under Other Expenses (refer to Note 19: Other Expenses). The corresponding finance lease liability (current and non-current) was also derecognised and the associated gain from the derecognition of the liability reflected under Other Gains (refer to Note 11: Other Gains).

(x) Employee Benefits

Employee benefits include:

  • short-term employee benefits such as wages and salaries, annual leave loading, and applicable on-costs, if expected to be settled wholly before twelve months after the end of the annual reporting period in which the employees render the related services;
  • other long-term benefits such as long service leave and annual leave; and
  • termination benefits.

On-costs include annual leave, long service leave, superannuation and other costs that are incurred when employees take annual and long service leave.

Wages and Salaries

Accrued wages and salaries are measured at the amount that remains unpaid to employees at the end of the reporting period.

Annual and Long Service Leave

Annual and long service leave including applicable on-costs that are not expected to be wholly settled before twelve months after the end of the reporting period, when the employees render the related service are measured at the present value of estimated future payments to be made in respect of services provided by employees up to the end of the reporting period. Consideration is given to the future wage and salary levels, experience of employee departures and periods of service. At the end of each reporting period, the present value of future annual leave and long service leave payments is estimated using market yields on Commonwealth Government bonds with terms to maturity that match, as closely as possible, the estimated future cash flows.

Annual leave liabilities have been estimated on the assumption that they will be wholly settled within three years. In 2015-16 the rate used to estimate the present value of future annual leave payments leave is 101.4% (101.0% in 2014-15).

In 2015-16, the rate used to estimate the present value of future payments for long service leave is 114.7% (104.2% in 2014-15). The use of a higher rate resulted in an increase of $11.7 million in the long service leave liability and the related expense.

The long service leave liability is estimated with reference to the minimum period of qualifying service. For employees with less than the required minimum period of 7 years of qualifying service, the probability that employees will reach the required minimum period has been taken into account in estimating the provision for long service leave and applicable on-costs.

The provision for annual leave and long service leave includes estimated on-costs. As these on-costs only become payable if the employee takes annual and long service leave while in-service, the probability that employees will take annual and long service leave while in service has been taken into account in estimating the liability for on-costs.

Annual leave and long service leave liabilities are classified as current liabilities in the Balance Sheet where there are no unconditional rights to defer the settlement of the liability for at least 12 months. Conditional long service leave liabilities are classified as non-current because the Directorate has an unconditional right to defer the settlement of the liability until the employee has completed the requisite years of service.

(y) Superannuation

The Directorate receives funding for superannuation payments as part of the Government Payment for Outputs. The Directorate then makes payments on a fortnightly basis to the Territory Banking Account to cover the Directorate’s superannuation liability for the Commonwealth Superannuation Scheme (CSS) and the Public Sector Superannuation Scheme (PSS). This payment covers the CSS/PSS employer contribution, but does not include the productivity component. The productivity component is paid directly to the Commonwealth Superannuation Corporation (CSC) by the Directorate. The CSS and PSS are defined benefit superannuation plans meaning that the defined benefits received by employees are based on the employee’s years of service and average final salary.

Superannuation payments have also been made directly to superannuation funds for those members of the Public Sector who are part of superannuation accumulation schemes. This includes the Public Sector Superannuation Scheme Accumulation Plan (PSSAP) and schemes of employee choice.

The total Territory superannuation liability for the CSS, PSS, and CSC is recognised in the Chief Minister, Treasury and Economic Development Directorate’s Superannuation Provision Account and the external schemes recognise the superannuation liability for the PSSAP and other schemes respectively. This superannuation liability is not recognised at individual agency level.

The ACT Government is liable for the reimbursement of the emerging costs of benefits paid each year to members of the CSS and PSS in respect of the ACT Government service provided after 1 July 1989. These reimbursement payments are made from the Superannuation Provision Account.

(z) Equity Contributed by the ACT Government

Contributions made by the ACT Government, through its role as owner of the Directorate, are treated as contributions of equity.

Increases or decreases in net assets as a result of Administrative Restructures are also recognised in equity.

(aa) Insurance

Major risks are insured through the ACT Insurance Authority. The excess payable, under this arrangement, varies depending on each class of insurance held.

(ab) Third Party Monies

The Directorate holds third party monies in a trustee capacity for the Health Directorate Human Research Ethics Committee and for residents of its Mental Health facilities. The Directorate also holds third party monies in an administrative capacity which is principally derived from patients treated by salaried specialists.

Third party transactions are excluded from the Directorate’s financial statements. Details of third party monies are shown at Note 42: Third Party Monies.

(ac) Budgetary Reporting - Explanation of Major Variances between Actual Amounts and Original Budget Amounts

Explanations of major variances between the 2015-16 original budget and the 30 June 2016 actual results are discussed in Notes 43 (Controlled) and 57 (Territorial): Budgetary Reporting.

The definition of ‘major variances’ is provided in Note 2(ad): Significant Accounting Judgements and Estimates - Budgetary Reporting - Explanation of Major Variances between Actual Amounts and Original Budget Amounts.

(ad) Significant Accounting Judgements and Estimates

In the process of applying the accounting policies listed in this note, the Directorate has made the following judgements and estimates that have the most significant impact on the amounts recorded in the financial statements:

  1. Fair Value of Assets: The Directorate has made a significant estimate regarding the fair value of its assets. Land and Leasehold Improvements have been recorded at market value of similar properties as determined by an independent valuer. Buildings have been recorded at fair value based on a depreciated replacement cost as determined by an independent valuer. This valuation is determined by reference to the new cost of the buildings less depreciation for their physical, functional and economic obsolescence. The fair value of assets is subject to management assessment between formal valuations.
  2. Employee Benefits: Significant judgements have been applied in estimating the liability for employee benefits. The estimated liability for annual and long service leave requires a consideration of the future wages and salary levels, experience of employee departures, probability that leave will be taken in service and periods of service. The estimate also includes an assessment of the probability that employees will meet the minimum service period required to qualify for long service leave and that on-costs will become payable.

    The significant judgements and assumptions included in the estimation of annual and long service leave liabilities include an assessment by an actuary. The Australian Government Actuary performed this assessment in May 2014. The assessment by an actuary is performed every 5 years. However it may be performed more frequently if there is a significant contextual change in the parameters underlying the 2014 report. The next actuarial review is expected to be undertaken by May 2019.
  3. Estimation of the Useful Lives of Property, Plant and Equipment (PPE): The Directorate has made a significant estimate in determining the useful lives of its PPE. The estimation of useful lives of PPE is based on the historical experience of similar assets and in some cases has been based on valuations provided by AON Risk Solutions. The useful lives are assessed on an annual basis and any adjustments are made when considered necessary.

    Disclosure concerning an asset’s useful life can be found at Note 2(u) Depreciation and Amortisation of Non-Current Assets.
  4. Depreciation and Amortisation: The Directorate has made a significant estimate in the lengths of useful lives over which its assets are depreciated and amortised. This estimation is the period in which utility will be gained from the use of the asset, based on either estimates from officers of the Directorate or an independent valuer.
  5. Allowance for Impairment Losses: The Directorate has made a significant estimate in the calculation of the allowance for impairment losses for receivables in the Directorate’s Financial Statements. This significant estimate is based on a number of categorisations of receivables. These categorisations are considered by management to be appropriate and accurate, based upon the pattern demonstrated in collecting receivables in the past financial years. The categorisations are associated with accounts in bankruptcy, unpaid objections and past write-offs.
  6. Contingent Liabilities: Contingent liabilities are an estimate provided by the ACT Government Solicitor of the likely liability for legal claims against the Directorate.
  7. Budgetary Reporting - Explanation of Major Variances between Actual Amounts and Original Budget Amounts: Significant judgements have been applied in determining what variances are considered as ‘major variances’ requiring explanations in Notes 43 (Controlled) and 57 (Territorial): Budgetary Reporting. Variances are considered to be major variances if both of the following criteria are met:
    • The line item is a significant line item: the line item actual amount accounts for more than 10% of the relevant associated category (Income, Expenses and Equity totals) or sub-element (e.g. Current Liabilities and Receipts from Operating Activities totals) of the financial statements; and
    • The variances (original budget to actual) are greater than plus (+) or minus (-) 10% of the budget for the financial statement line item.
    Further information on this is provided in Note 2(ac): Budgetary Reporting.

(ae) Accounting Standards adopted early for the 2015-16 reporting period

AASB 2015-2 Amendments to Australian Accounting Standards - Disclosure Initiative: Amendments to
AASB 101
and AASB 2015-7 Amendments to Australian Accounting Standards - Fair Value Disclosures of Not-For-Profit Public Sector Entities have been early adopted for the 2015-16 reporting period, even though the standards are not required to be applied until annual reporting periods beginning on or after 1 July 2016.

AASB 2015-2 amends AASB 101 Presentation of Financial Statements including clarifying that agencies should not be disclosing immaterial information and that the presentation of information in notes can and should be tailored to provide users with the clearest view of an agency’s financial performance and financial position.

AASB 2015-7 amends AASB 13 Fair Value Measurement to provide disclosure relief to not-for profit public sector agencies from certain disclosures about the fair value measurements of property, plant and equipment held for their current service potential rather than to generate net cash inflows. This includes relief from disclosures of quantitative information about the significant unobservable inputs used in fair value measurements and of the sensitivity of certain fair value measurements to changes in unobservable inputs.

(af) Impact of Accounting Standards Issued but yet to be Applied

The following new and revised accounting standards and interpretations have been issued by the Australian Accounting Standards Board but do not apply to the current reporting period. These standards and interpretations are applicable to future reporting periods. The Directorate does not intend to adopt these standards and interpretations early. Where applicable, these Australian Accounting Standards will be adopted from their application date.

  • AASB 9 Financial Instruments (December 2014) (application date 1 January 2018);

This standard supersedes AASB 139 Financial Instruments: Recognition and Measurement. The main impact of AASB 9 is that it will change the classification, measurement and disclosures of the Directorate’s financial assets. No material financial impact on the Directorate is expected.

  • AASB 15 Revenue from Contracts with Customers (application date 1 January 2018);

AASB 15 is the new standard for revenue recognition. It establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces AASB 111 Construction Contracts and AASB 118 Revenue. The Directorate has assessed this standard and has identified that there could be potential impact on the timing of the recognition of revenue for user charges. This impact is not expected to be material.

  • AASB 16 Leases (application date 1 January 2019)

AASB 16 is the new standard for leases. It introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset value is low. The Directorate has assessed this standard and has identified that there could be potential financial impact. The Directorate will make a more detailed assessment of the impact over the next 12 months.

  • AASB 2015-6 Amendments to Australian Accounting Standards – Extending Related Party Disclosures to Not-for-Profit Public Sector Entities (application date 1 July 2016)

This standard extends the scope of AASB 124 Related Party Transactions to the not-for-profit sector and updates AASB 124 to include implementation guidance (including illustrative examples) to assist not-for-profit entities to apply the new requirements.  While there is no material financial impact in implementing this standard, there will be increased disclosure required by the Directorate.

Note 3. Change in Accounting Policy and Accounting Estimates, and Correction of Prior Period Errors

Change in Accounting Policy and Accounting Estimates

The Directorate had no changes in Accounting Policy or Accounting Estimates during the reporting period.

Correction of Prior Period Errors

The Directorate had no correction of prior period errors during the reporting period.

Note 4. Government Payment for Outputs

Government Payment for Outputs (GPO) is revenue received from the ACT Government to fund the costs of delivering outputs.  The ACT Government pays GPO appropriation on a fortnightly basis.

  2016
$'000
2015
$'000
Revenue from the ACT Government    
Government Payment for Outputsa 272,366 252,617
Total Government Payment for Outputs 272,366 252,617
  1. The increase mainly relates to additional funds received for growth in acute services, including emergency and additional elective surgery, mental health, outpatient, community and primary care services and women and children’s health.

Note 5. User Charges for Goods and Services

User charge revenue is derived by providing goods and services to other ACT Government agencies and to the public. User charge revenue is not part of ACT Government appropriation and is paid by the user of the goods or services. This revenue is driven by consumer demand and is commercial in nature.

  2016
$'000
2015
$'000
User Charges - ACT Government    
Local Hospital Network Fundinga 810,999 760,262

Service Revenue*

1,922 1,522
Total User Charges - ACT Government 812,921 761,784
User Charges - Non-ACT Government    
Service Revenue* 11,711 11,232
Amounts Received for Highly Specialised Drugsb 34,241 16,102
Inpatient Fees 35,312 36,906
Facilities Fees 26,450 26,590
Non-inpatient Fees 1,291 1,056
Inventory Sales 12,001 12,285
Accommodation and Meals 3,774 3,653
Total User Charges - Non-ACT Government 124,780 107,824
Total User Charges 937,701 869,608
*Service Revenue ACT Government for 2014-15 has been increased by $1,190,264 with corresponding reduction to Service Revenue non-ACT Government to correct a misclassification in last year’s financial Statements.
  1. The increase mainly relates to growth in acute services, including emergency and additional elective surgery, mental health, outpatient, community and primary care services and women and children’s health.
  2. The increase is mainly due to the inclusion of additional drugs under the Commonwealth High Cost Drug reimbursement scheme.

Note 6. Interest

  2016
$'000
2015
$'000
Revenue from Non-ACT Government Entities    
Interest Revenue 77 70
Total Interest Revenue from Non-ACT Government Entities 77 70
Total Interest Revenue 77 70
Total interest revenue from financial assets not at fair value through profit and loss. 77 70

Note 7. Distribution from Investments with the Territory Banking Account

  2016
$'000
2015
$'000
Revenue from ACT Government Entities    
Distribution from Investments with the Territory Banking Account 64 97
Total Distribution from Investment with the Territory Banking Account 64 97

Note 8. Resources Received Free of Charge

  2016
$'000
2015
$'000
Revenue from ACT Government Entities    
Legal Services 1,591 1,359
Other Resources Received Free of Charge 152 112
Total Resources Received Free of Charge 1,743 1,471

Note 9. Other Revenue

Other Revenue arises from the core activities of the Directorate.  Other Revenue is distinct from Other Gains, as Other Gains are items that are not part of the core activities of the Directorate.

  2016
$'000
2015
$'000
Revenue from Non-ACT Government Entities    
Grants 15,374 16,493
Other 3,679 3,267
Total Other Revenue from Non-ACT Government Entities 19,053 19,760
Total Other Revenue 19,053 19,760

The Directorate has received grants from various entities which must be spent on specific purposes.

  2016
$'000
2015
$'000
Contribution Analysis - Grants    
Contributions which have conditions of expenditure still required to be met:    
Contributions recognised as revenue during the current reporting period for which expenditure in manner specified had not occurred at balance date 784 3,479
Contributions recognised as revenue in previous reporting periods which were not expended in the current reporting period 12,785 7,653
Total Amount of Unexpended Contributions at Balance Date 13,569 11,132

Note 10. Gains on Investments

  2016
$'000
2015
$'000
Revenue from ACT Government Entities    
Unrealised Gains on Investments - 12
Total Gains on Investments - 12

Note 11. Other Gains

Other gains are transactions that are not part of the Directorate’s core activities. Other gains are distinct from other revenue, as other revenue arises from the core activities of the Directorate.

  2016
$'000
2015
$'000
Gains from the Sale of Assets 64 82
Assets Transferred from Other Entities 200 485
Donationsa 1,417 1,032
Gain from De-recognition of Finance Lease Liabilityb - 5,469
Total Other Gains 1,681 7,068
  1. The increase mainly relates to higher donations received from Canberra Hospital Foundation for the purpose of purchasing equipment for the hospital.
  2. The 2014-15 gain resulted from de-recognition of lease vehicles liabilities following a change to whole‑of‑government vehicle leasing arrangements, which took effect on 23 April 2015.

The Directorate has received donations from organisations and the general public which must be spent on specific purposes.

  2016
$'000
2015
$'000
Contribution Analysis - Donations    
Contributions which have conditions of expenditure still required to be met:    
Contributions recognised as revenue during the current reporting period for which expenditure in manner specified had not occurred at balance date 248 427
Contributions recognised as revenue in previous reporting periods which were not expended in the current reporting period 4,412 2,730
Total Amount of Unexpended Contributions at Balance Date 4,660 3,157

Note 12. Employee Expenses

  2016
$'000
2015
$'000
Wages and Salariesa 621,058 582,352
Annual Leave Expenseb 17,374 16,523
Long Service Leave Expensec 26,148 14,054
Workers' Compensation Insurance Premium 19,438 20,457
Termination Expense 1,586 718
Other Employee Benefits and On-Costs 9,133 9,007
Total Employee Expenses 694,737 643,111
  No. No.
Average full-time equivalent staff levels during the year were: 6,270 6,092
  1. The increase in Wages and Salaries mainly relates to pay rises under collective agreements and increases in staff numbers related to growth in services in acute services including emergency department and additional elective surgery, mental health, outpatient, community and primary care services and women and children’s health.
  2. The increase is mainly due to the impact of collective agreement pay rises, an increase in staff numbers related to growth in services provided to patients and the growth in liability due to leave earned exceeding leave taken.
  3. The increase in Long Service Leave is mainly due to an increase in the rate used to estimate the present value of Long Service Leave payments from 104.2% to 114.7% ($11.7 million).

Note 13. Superannuation Expenses

  2016
$'000
2015
$'000
Superannuation Contributions to the Territory Banking Accounta 36,830 38,040
Productivity Benefit 4,699 4,976
Superannuation Payment to Commonwealth Superannuation Corporation (for the PSSAP) 3,560 3,460
Superannuation to External Providersb 40,482 34,567
Total Superannuation Expenses 85,571 81,043
  1. The decrease is mainly due to most new employees being members of superannuation schemes managed by external providers as the defined benefits scheme is closed for new employees.
  2. The increase is due to pay rises under collective agreements and an increase in staff numbers.

Note 14. Supplies and Services

  2016
$'000
2015
$'000
Audit Fees 660 454
Blood Products 8,621 8,856
Clinical Expenses/Medical Surgical Supplies* 62,005 61,543
Communications 3,743 3,617
Computer Expensesa 40,877 38,281
Contractors and Consultantsb* 18,070 10,069
Domestic Services, Food and Utilities 33,943 33,509
General Administrationc 20,132 18,194
Hire and Rental Charges 4,921 4,216
Insuranced 32,335 30,993
Minor Capital 3,501 4,054
Non-Contract Services 5,625 4,718
Operating Lease Rental Paymentse 8,959 7,170
Pharmaceuticalsf 53,548 37,834
Printing and Stationery 2,381 2,529
Property and Rental Expenses 2,178 2,305
Public Relations 625 686
Publications 1,615 1,348
Repairs and Maintenanceg 18,331 17,023
Staff Development and Recruitment 7,284 6,973
Travel and Accommodation 1,122 1,013
Vehicle Expensesh 696 1,207
Visiting Medical Officersi 29,187 27,279
Total Supplies and Services 360,359 323,871
*The contract cost for the Dialysis Centre ($3,554,808 in 2015-16, $2,491,645 in 2014-15) has been reclassified as Contractors and Consultants. This had the effect of increasing Contractors and Consultants and decreasing the Clinical Expenses/Medical Surgical Supplies.
  1. The increase in computer expenses is due to a combination of factors, including inflation, increased Microsoft licensing cost, increase in staff numbers and additional support charges for new operation computer software projects such as Faster Access to ICT Systems, Intensive Care Unit Clinical System and Patient Master Index upgrade.
  2. The increase in contractors and consultants is mainly due to costs associated with the implementation of the Directorate’s new initiative to improve operational efficiency. Expensing of Information and Communication Technology contractor costs that were incorrectly accounted for as prepaid expenses in prior years has also contributed to this increase.
  3. The increase in general administration is due to a combination of factors including inflation, increase in staff numbers and additional advertising costs for promoting health prevention and early intervention.
  4. The increase in insurance expense is a result of inflation and an increase in excess payments.
  5. The increase in operating lease rental payments is mainly due to the effect of new vehicle leasing arrangements.
  6. The increase in pharmaceuticals is mainly due to higher demand for Hepatitis C medications as it became available on the Pharmaceutical Benefits Scheme from 1 March 2016.
  7. The increase in repairs and maintenance is due to the need for repairs on ageing plant and equipment and inflation.
  8. The reduction in vehicle expenses is due to the full-year effect of the change in motor vehicle lease type from finance leases to operating leases with these costs now reflected as operating lease rental payments, as well as lower fuel charges in 2015-16.
  9. The increase in visiting medical officers is due to covering for staff specialist vacancies and an increase in elective surgeries.

Note 15. Depreciation and Amortisation

  2016
$'000
2015
$'000
Depreciation    
Buildingsa 17,998 22,665
Plant and Equipment 10,434 10,643
Leasehold Improvements 1,580 3,088
Total Depreciation 30,012 36,396
Amortisation    
Intangible Assetsb 12,956 10,190
Total Amortisation 12,956 10,190
Total Depreciation and Amortisation 42,968 46,586
  1. The reduction is due to 2014-15 amount including accelerated depreciation for building 15 at the Canberra Hospital which has been demolished.
  2. The increase is a result of finalised computer software projects which became new assets in 2015-16. These computer software packages relate to systems used in the operations of the Directorate and include Clinical Portal Suites, Patient Master Index, Radiology Information System Upgrade, Queue Flow Management Solution, Intensive Care Unit Metavision, new Cardiology Systems, Order Entry, Positive Patient Identification System and GP Healthnet.

Note 16. Grants and Purchased Services

Grants are sums of money provided to organisations or individuals for a specified purpose directed at achieving goals and objectives consistent with Government policy on health promotion.

Purchased Services are amounts paid to obtain services by the Directorate from other ACT Government agencies and external parties. They may be for capital, current or recurrent purposes and they are usually subject to terms and conditions set out in a contract, agreement, or by legislation.

Non-Government Organisation service providers provide services in a range of areas including Home and Community Care, Alcohol and Drug, Community Mental Health, Women’s Health, Aged Care and Aboriginal Health.

Purchased Services from Calvary Hospital is for the provision of healthcare in the ACT.

Cross-Border Health Costs relates to costs incurred by ACT residents in interstate hospitals.

Expenditure to Other Service Providers are mainly for the provision of elective surgery procedures by private hospitals.

  2016
$'000
2015
$'000
Grants    
Grantsa 3,139 2,161
Total Grants 3,139 2,161
Purchased Services    
Calvary Hospitalb 8,214 4,086
Non-Government Organisationsc 67,068 64,387
Cross-Border Health Costs 28 24
Otherd 11,374 7,685
Total Purchased Services 86,684 76,182
Total Grants and Purchased Services 89,823 78,343
  1. The increase is the result of changed funding model, from single-year projects to multi-year projects which had the effect of lower funding grants in 2014-15.
  2. The increase relates to growth and funding for new beds and the Hospital in the Home Initiative.
  3. The increase relates to inflation and new service initiatives such as specialised drug treatment services, community mental health services, expansion of community and home based services, end of life care at home and expanded community-based women and children’s options.
  4. The increase relates mainly to an increase in elective surgery services.

Note 17. Borrowing Costs

Borrowing costs are finance charges in respect of finance leases for the Directorate’s fleet of vehicles and clinical equipment. Due to a change in the Whole-of-Government vehicle leasing arrangements with SG Fleet, from 23 April 2015 all such leases for the Directorate will be classified as operating leases (whose costs appear in supplies and services) rather than finance leases. There will be no borrowing costs in respect of the Directorate’s fleet of vehicles in the next financial year.

  2016
$'000
2015
$'000
Finance Chargesa - 262
Finance Cost on Make Good 44 43
Total Borrowing Costs 44 305
  1. The Directorate no longer has finance leases, due to changes in the Whole-of-Government leasing arrangements with SG Fleet.

Note 18. Cost of Goods Sold

Cost of Goods Sold represents hospital supplies sold to private hospitals.

  2016
$'000
2015
$'000
Cost of Goods Sold 9,000 9,295
Total Cost of Goods Sold 9,000 9,295

Note 19. Other Expenses

  2016
$'000
2015
$'000
Miscellaneous Expenses a 7,828 3,302
Legal Settlements 2,105 1,935
Waivers, Impairment Losses and Write-offs (see Note 20) 2,562 2,244
Loss on Sale of Assets 25 12
Loss on Derecognition of Motor Vehicles Under a Finance Leaseb - 5,286
Total Other Expenses 12,520 12,779
  1. The increase mainly relates to expensing of some prior year operating expenses incorrectly capitalised and computer software projects that were discontinued in 2015-16, which include electronic referrals to outpatient services and real time bed management.
  2. The reduction is due to recognising a loss on de-recognition of motor vehicles under a finance lease as a result of a change to motor vehicle leasing arrangements, which took effect from 23 April 2015. All leased motor vehicles are now under operating leases.

Note 20. Waivers, Impairment Losses and Write-Offs

Under Section 131 of the Financial Management Act 1996 the Treasurer may, in writing, waive the right to payment of an amount payable to the Territory.

A waiver is the relinquishment of a legal claim to a debt. The write-off of a debt is the accounting action taken to remove a debt from the books but does not relinquish the legal right of the Directorate to recover the amount. The write-off of debts may occur for reasons other than waivers.

The waivers, impairment losses and write-offs listed below have occurred during the reporting period for the Directorate.

  No. 2016
$'000
No. 2015
$'000
Waivers        
Total Waivers - - - -
Impairment Losses        
Impairment Loss from Receivables        
Trade Receivablesa 1,104 1,477 194 431
Total Impairment Loss from Receivables 1,104 1,477 194 431
Impairment Loss from Property, Plant and Equipment        
Plant and Equipment 42 247 19 217
Total Impairment Losses from Property, Plant and Equipment 42 247 19 217
Total Impairment Losses 1,146 1,724 213 648
Write-Offs        
Irrecoverable Debtsb 3,412 838 2,742 1,596
Total Write-Offs 3,412 838 2,742 1,596
Total Waivers, Impairment Losses and Write-Offs 4,558 2,562 2,955 2,244
  1. This increase is largely attributable to an increase in Medicare ineligible patient debts being provided for as doubtful.
  2. The reduction mainly relates to high number of low value write-offs in 2016..

Note 21. Act of Grace Payments

Under Section 130 of the Financial Management Act 1996 the Treasurer may, in writing, authorise Act of Grace Payments be made by the Directorate. Act of Grace Payments are a method of providing equitable remedies to entities or individuals that may have been unfairly disadvantaged by the Government but have no legal claim to the payment.

The Directorate made no Act of Grace Payments during the current and prior reporting periods.

Note 22. Auditor’s Remuneration

Auditor’s remuneration represents fees charged by the ACT Audit Office for financial audit services provided to the Directorate.

  2016
$'000
2015
$'000
Audit Services    
Audit Fees Paid or Payable to the ACT Audit Office 232 223
Total Audit Services 232 223

No other services were provided by the ACT Audit Office.

Note 23. Cash and Cash Equivalents

The Directorate holds a number of bank accounts, as part of the whole-of-government banking arrangements, with Westpac Banking Corporation and previously with the Commonwealth Bank. The Directorate received interest at the rate of 2.81% (3.10% in 2014-15).  These funds may be withdrawn upon request.

  2016
$'000
2015
$'000
Cash on Hand 43 44
Cash at Bank 106,532 105,025
Total Cash and Cash Equivalents 106,575 105,069

Note 24. Receivables

  2016
$'000
2015
$'000
Current Receivables    
Trade Receivables 1,835 1,103
Trade Receivables - Patient Fees a 12,607 8,359
  14,442 9,462
Less: Allowance for Impairment Losses b (4,141) (2,781)
  10,301 6,681
Other Trade Receivablesc 15,950 11,311
Less: Allowance for Impairment Losses (567) (450)
  15,383 10,861
Accrued Revenued 9,674 6,068
Sub-Total Current Receivables 35,358 23,610
Net GST Receivable 3,403 3,622
Total Receivables 38,761 27,232
  1. The increase mainly relates to higher medicare ineligible patient debts which takes longer to collect. Private patient debt is also higher due to some patient accounts having to be resubmitted to Medical Insurance Funds for payment as problems were encountered with implementation of a new billing system.
  2. The increase mainly relates to additional impairment allowance provided for overdue medicare ineligible patients and private patients.
  3. The increase mainly relates to timing of amounts receivable from the Local Hospital Network Directorate for providing health services.
  4. The increase mainly relates to an increase in revenue for chargeable patient fees due to higher patient numbers and an increase in amounts receivable from the Commonwealth for high costs drugs reimbursement.
Ageing of Receivables Not Overdue
$'000
Overdue
Less than
30 days
$'000
Overdue
30 to 60
days
$'000
Overdue
Greater
than
60 days
$'000
Total
2016          
Not Impaired          
Receivables a 27,887 2,915 598 7,361 38,761
Impaired          
Receivables - - - 4,708 4,708
2015          
Not Impaired          
Receivables 21,050 1,811 782 3,589 27,232
Impaired          
Receivables - - - 3,232 3,232

Receivables are written-off during the year in which they are considered to become uncollectible.

  1. ‘Not Overdue’ component of Receivables largely consist of Goods and Services Input Tax receivable from the Australian Taxation Office and private patient fees accrued in June. ‘Overdue – Greater than 60 Days’ are mostly third party, workers’ compensation or public liability transactions which have become the subject of legal claims as to responsibility for the payment. Substantial delays can therefore occur before liability for such debts is determined. This overdue amount also includes amounts receivable from Calvary Health Care for medical officers seconded from the Directorate.

    'Past Due – Greater Than 60 Days' are mostly third party, workers’ compensation or public liability transactions which have become the subject of legal claims as to responsibility for the payment. Substantial delays can therefore occur before liability for such debts is determined. This also includes amounts receivable from Calvary Health Care for medical officers seconded from Canberra Hospital and Health Services.
  2016
$'000
2015
$'000
Reconciliation of the Allowance for Impairment Losses    
Allowance for Impairment Losses at the Beginning of the Reporting Period 3,231 2,800
Additional Allowance and Impairment Losses Recognised 1,477 431
Allowance for Impairment Losses at the End of the Reporting Period 4,708 3,231
Classification of ACT Government/Non-ACT Government Receivables    
Receivables from ACT Government Entities    
Net Trade Receivables 69 61
Net Other Trade Receivables 236 98
Net Goods and Services Tax Receivable - 50
Total Receivables from ACT Government Entities 305 209
Receivables from Non-ACT Government Entities    
Net Trade Receivables 9,665 6,170
Net Other Trade Receivables 15,714 11,213
Net Goods and Services Tax Receivable 3,403 3,572
Accrued Revenue 9,674 6,068
Total Receivables from Non-ACT Government Entities 38,456 27,023
Total Receivables 38,761 27,232

Note 25. Inventories

The Directorate’s inventory consists of Pharmaceuticals, Medical and Surgical Supplies, Pathology Supplies and general consumables.

  2016
$'000
2015
$'000
Current Inventory    
Purchased Items - Costa 10,106 8,655
Total Current Inventory 10,106 8,655
Total Inventory 10,106 8,655
  1. The increase mainly relates to higher drug purchases due to increased demand for ‘high costs drugs’.

Note 26. Investments

Short-term investments were held with the Territory Banking Account in the Cash Enhanced Portfolio throughout the year. These funds are able to be withdrawn upon request.

The purpose of the investment in the Fixed Interest Portfolio is to hold it for a period of longer than                   12 months. The total carrying amount of the Fixed Interest Portfolio investment has been measured at fair value. 

  2016
$'000
2015
$'000
Non-Current Investments $’000 $’000
Investments with the Territory Banking Account - Cash Enhanced Portfolio at Fair Value 3,019 3,027
Total Non-Current Investments 3,019 3,027
Total Investments 3,019 3,027

Note 27. Property, Plant and Equipment

Property, plant and equipment includes the following classes of assets – land, buildings, leasehold improvements and plant and equipment.  Property, plant and equipment does not include assets held for sale.

  • Land includes leasehold land held by the Directorate.
  • Buildings include hospital buildings, community health centres and multi storey car parks. 
  • Leasehold improvements represent capital expenditure incurred in relation to leased assets.  The Directorate has fit-outs in its leased buildings.
  • Plant and equipment includes medical equipment, motor vehicles, mobile plant, air conditioning and heating systems, office and computer equipment, furniture and fittings, and other mechanical and electronic equipment.
  2016
$'000
2015
$'000
Land and Buildings    
Land at Fair Value 41,605 40,645
Total Land Assets 41,605 40,645
Buildings at Fair Value a 894,516 815,234
Less: Accumulated Depreciation (34,413) (16,416)
Total Written Down Value of Buildings 860,103 798,818
Total Land and Written Down Value of Buildings 901,708 839,463
Leasehold Improvements    
Leasehold Improvements at Fair Valueb 6,786 6,527
Less: Accumulated Depreciation (4,669) (3,088)
Total Written Down Value of Leasehold Improvements 2,117 3,439
Plant and Equipment    
Plant and Equipment at Costc 116,172 110,130
Less: Accumulated Depreciation (74,994) (66,464)
Less: Accumulated Impairment Losses (247) (439)
Total Written Down Value of Plant and Equipment 40,931 43,227
Total Written Down Value of Property, Plant and Equipment 944,756 886,129

Reconciliation of Property, Plant and Equipment

The following table shows the movement of Property, Plant and Equipment during 2015-16.

  Land
$'000
Buildings
$'000
Leasehold
Improvements
$'000
Plant and
Equipment
$'000
Total
$'000
Carrying Amount at 1 July 2015 40,645 798,818 3,439 43,227 886,129
Additions 200 78,461 259 8,243 87,163
Revaluation Increment 760 844 - - 1,604
Disposals - (22) - (2,201) (2,223)
Depreciation - (17,998) (1,580) (10,434) (30,012)
Depreciation Write Back for Asset Disposals - 1 - 1,904 1,905
Impairment Losses Recognised in the Operating (Deficit) - - - (247) (247)
Reversal of Impairment Losses Recognised in the Operating (Deficit) - - - 439 439
Carrying Amount at 30 June 2016 41,605 860,103 2,117 40,931 944,756

The following table shows the movement of Property, Plant and Equipment during 2014-15.

  Land
$'000
Buildings
$'000
Leasehold
Improvements
$'000
Plant and
Equipment
$'000
Total
$'000
Carrying Amount at 1 July 2014 40,250 771,290 4,811 42,749 859,100
Additions 485 50,193 1,716 17,172 69,566
Revaluation (Decrement) (90) - - - (90)
Disposals - - - (6,999) (6,999)
Depreciation - (22,665) (3,088) (10,643) (36,396)
Depreciation Write Back for Asset Disposals - - - 6,143 6,143
Impairment Losses Recognised in the Operating (Deficit) - - - (217) (217)
Reversal of Impairment Losses Recognised in the Operating (Deficit) - - - 308 308
Other       (5,286) (5,286)
Carrying Amount at 30 June 2015 40,645 798,818 3,439 43,227 886,129

Valuation of Non-Current Assets

The next valuation will be undertaken during 2016-17.

Fair Value Hierarchy

The Directorate is required to classify property, plant and equipment into a Fair Value Hierarchy that reflects the significance of the inputs used in determining their fair value. The Fair Value Hierarchy is made up of the following three levels:

  • Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities that the Directorate can access at the measurement date;
  • Level 2 – inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and
  • Level 3 – inputs that are unobservable for particular assets or liabilities.

Details of the Directorate’s property, plant and equipment at fair value and information about the Fair Value Hierarchy at 30 June 2016 are as follows:

Classification According to Fair Value Hierarchy at 30 June 2016
  Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
Property, Plant and Equipment at Fair Value        
Land - - 41,605 41,605
Buildings - 2,758 857,345 860,103
Leasehold Improvements - - 2,117 2,117
  - 2,758 901,067 903,825
Details of the Directorate's property, plant and equipment at fair value and information about the Fair Value Hierarchy at 30 June 2015 is as follows:
Classification According to Fair Value Hierarchy at 30 June 2015
  Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
Property, Plant and Equipment at Fair Value        
Land - - 40,645 40,645
Buildings - 2,845 795,973 798,818
Leasehold Improvements - - 3,439 3,439
  - 2,845 840,057 842,902

Transfers between Categories

There have been no transfers between Levels 1, 2 and 3 during the current and previous reporting period.

Valuation Techniques, Inputs and processes

Level 2 Valuation Techniques and Inputs

Valuation Technique: the valuation technique used to value land and buildings is the market approach that reflects recent transaction prices for similar properties and buildings (comparable in location and size).

Inputs: Prices and other relevant information generated by market transactions involving comparable land and buildings were considered. Regard was taken of the Crown Lease terms and tenure, the Australian Capital Territory Plan and the National Capital Plan, where applicable, as well as current zoning.

Level 3 Valuation Techniques and Inputs

Valuation Technique: Land where there is no active market or significant restrictions is valued through the market approach which values a selection of land with similar approximate utility.

Inputs: In determining the value of land with similar approximate utility, significant adjustments to market based data was required.

Valuation Technique: Buildings and Leasehold Improvements were considered specialised assets by the Valuers and measured using the cost approach that reflects the cost to a market participant to construct assets of comparable utility adjusted for obsolescence. For Buildings historical cost per square metre of floor area was also used in measuring fair value.

Inputs: In determining the value of land with similar approximate utility, significant adjustment to market based data was required.

Inputs: In determining the value of buildings and leasehold improvements regard was given to the age and condition of the assets, their estimated replacement cost and current use. This required the use of data internal to the Directorate.

There has been no change to the above valuation techniques during the reporting period.

Transfers in and out of a fair value level are recognised on the date of the event or change in circumstances that caused the transfer.

Fair Value Measurements using Significant Unobservable Inputs (Level 3)
At 30 June 2016 Land
$'000
Buildings
$'000
Leasehold
Improvements
$'000
Fair Value at the Beginning of the Reporting Period 40,645 798,818 3,439
Additions 200 78,461 259
Revaluation Increments Recorded in Other Comprehensive Income 760 844 -
Depreciation - (17,998) (1,580)
Other Movements - (22) -
Fair Value at the End of the Reporting Period 41,605 860,103 2,117
 
At 30 June 2015 Land
$'000
Buildings
$'000
Leasehold
Improvements
$'000
Fair Value at the Beginning of the Reporting Period 40,250 771,290 4,811
Additions 485 50,193 1,716
Revaluation (Decrements) Recorded in Other Comprehensive Income (90) - -
Depreciation - (22,665) (3,088)
Fair Value at the End of the Reporting Period 40,645 798,818 3,439

 

Information about Significant Unobservable Inputs (Level 3) in Fair Value Measurements
Item Fair Value at 30 June Significant Unobservable Inputs
2016
$'000
2015
$'000
Valuation Technique: Market Approach
Land 41,605 40,645 Selection of land with similar approximate utility and permissible usage
Valuation Technique: Depreciated Replacement Cost
Buildings 860,103 798,818 Consumed physical, functional and economic obsolescence
Leasehold Improvements 2,117 3,439 Consumed physical, functional and economic obsolescence

Note 28. Intangible Assets

The Directorate has only internally generated software.

  2016
$'000
2015
$'000
Computer Software    
Internally Generated Software    
Computer Software at Costa 83,348 65,797
Less: Accumulated Amortisationb (55,200) (43,214)
Total Internally Generated Software 28,148 22,583
Total Computer Software 28,148 22,583
Total Intangible Assets 28,148 22,583
  1. The increase is due to completed internally generated operational software projects including Clinical Portal Suites, Patient Master Index, Radiology Information System Upgrade, Queue Flow Management Solution, Intensive Care Unit Metavision, new Cardiology Systems, Order Entry, Positive Patient Identification System and GP Healthnet.
  2. The increase directly relates to amortisation of the new software applications listed above.

Reconciliation of Intangible Assets

The following table shows the movement of internally generated Intangible Assets during 2015-16. There was no externally purchased software during this reporting period.

  Internally
Generated
Software
$'000
Total
$'000
Carrying Amount at 1 July 2015 22,583 22,583
Additions 18,520 18,520
Amortisation (12,955) (12,955)
Carrying Amount at 30 June 2016 28,148 28,148

Reconciliation of Intangible Assets

The following table shows the movement of internally generated Intangible Assets during 2014-15. There was no externally purchased software during this reporting period.

  Internally
Generated
Software
$'000
Total
$'000
Carrying Amount at 1 July 2014 6,933 6,933
Additions 25,840 25,840
Amortisation (10,190) (10,190)
Carrying Amount at 30 June 2015 22,583 22,583

Note 29. Capital Works in Progress

Capital Works in Progress are assets being constructed over periods of time in excess of the present reporting period. These assets often require extensive installation work or integration with other assets, and contrast with simpler assets that are ready for use when acquired, such as motor vehicles and equipment. Capital Works in Progress are not depreciated as the Directorate is not currently deriving any economic benefits from them.

Assets, which are under construction or development in 2015-16, include hospital buildings, software and plant and equipment.

  2016
$'000
2015
$'000
Building Works in Progressa 129,508 82,785
Plant and Equipment Works in Progress - 227
Computer Software Works in Progressb 38,667 48,744
Total Capital Works in Progress 168,175 131,756
  1. The increase in building works in progress is a result of ongoing capital projects. These include the Secure Mental Health Unit, the University of Canberra Public Hospital, the Ngunnawal Bush Healing Farm, various works throughout the Canberra Hospital campus and other capital upgrade projects.
  2. The decrease in computer software works in progress is due to the completion of several operational computer software projects including Clinical Portal Suites, Patient Master Index, Radiology Information System Upgrade, Queue Flow Management Solution, Intensive Care Unit Metavision, new Cardiology Systems, Order Entry, Positive Patient Identification System and GP Healthnet.

Reconciliation of Capital Works in Progress

The following table shows the movement of Capital Works in Progress during 2015-16.

  Building
Works in
Progress
$'000
Plant and
Equipment
Works in
Progress
$'000
Computer
Software
Works in
Progress
$'000
Total
$'000
Carrying Amount at 1 July 2015 82,785 227 48,744 131,756
Additions 128,816 - 15,434 144,250
Capital Works in Progress        
Completed and Transferred to Property, Plant and Equipment and Intangible Assets (81,477) (222) (19,021) (100,720)
Capital Works Expensed (616) (5) (6,490) (7,111)
Carrying Amount at 30 June 2016 129,508 - 38,667 168,175

Reconciliation of Capital Works in Progress

The following table shows the movement of Capital Works in Progress during 2014-15.

  Building
Works in
Progress
$'000
Plant and
Equipment
Works in
Progress
$'000
Computer
Software
Works in
Progress
$'000
Total
$'000
Carrying Amount at 1 July 2014 79,626 2,186 65,971 147,783
Additions 55,434 8,163 8,613 72,210
Capital Works in Progress        
Completed and Transferred to Property, Plant and Equipment and Intangible Assets (51,909) (8,322) (25,840) (86,071)
Capital Works Expensed (366) (1,800) - (2,166)
Carrying Amount at 30 June 2015 82,785 227 48,744 131,756

Note 30. Other Assets

  2016
$'000
2015
$'000
Current Other Assets    
Prepayments 4,004 3,939
Total Current Other Assets 4,004 3,939
Total Other Assets 4,004 3,939

Note 31. Payables

  2016
$'000
2015
$'000
Current Payables    
Trade Payables a 23,229 3,633
Other Payables - 24
Accrued Expensesb 68,425 50,612
Total Payables 91,654 54,269
  1. The reason for the increase is an increase in the accrued capital works expenses ($23.0 million).
  2. The increase is mainly due to payment for Calvary Hospital for additional services ($8.0 million) and an increase in general accruals for other operating expenses including visiting medical officers costs ($1.2 million), pharmaceuticals costs ($2.2 million), medical and surgical supplies ($0.8 million) and ICT costs ($3.9 million).
  2016
$'000
2015
$'000
Payables are aged as followed    
Not Overdue 91,627 53,016
Overdue for Less than 30 Days 27 1,165
Overdue for 30 to 60 Days - 10
Overdue for More than 60 Days - 78
Total Payables 91,654 54,269
Classification of ACT Government/Non-ACT Government Payables    
Payables with ACT Government Entities    
Other Payables - -
Accrued Expenses 4,938 3,607
Total Payables with ACT Government Entities 4,938 3,607
Payables with Non-ACT Government Entities    
Trade Payables 97 3,633
Other Payables - 24
Accrued Expenses 86,619 47,005
Total Payables with Non-ACT Government Entities 86,716 50,662
Total Payables 91,654 54,269

Note 32. Borrowings

The Directorate received an interest-free loan from Environment and Planning Directorate payable over 10 years. The loan is for implementing energy and resource efficiency projects to reduce greenhouse gas emissions.

  2016
$'000
2015
$'000
Current Borrowings    
ACT Government Borrowings 352 -
Total Current Borrowings 352 -
Non-Current Borrowings    
ACT Government Borrowings 2,919 -
Total Non-Current Borrowings 2,919 -
 
Total Borrowings 3,271 -

Note 33. Other Provisions

Provision for Make Good

The Directorate entered into lease agreements for some office space in Civic and Belconnen. There are clauses within the lease agreements which require the Directorate, upon cessation of the tenancy, to return the office space to the condition it was in before it was leased (this is referred to as ‘make good’). The tenancies run for 5 years.

  2016
$'000
2015
$'000
Non-Current Other Provisions    
Provision for Make Good at the Beginning of the Reporting Period 1,418 1,375
Increase in Provision due to Unwinding of Discount 44 43
Total Other Provisions 1,462 1,418

Note 34. Employee Benefits

  2016
$'000
2015
$'000
Current Employee Benefits    
Annual Leavea 104,363 97,797
Long Service Leaveb 116,236 97,218
Accrued Salariesc 3,436 34,281
Other Benefits 38 210
Total Current Employee Benefits 224,073 229,506
     
Non-Current Employee Benefits    
Long Service Leaveb 16,966 14,529
Total Non-Current Employee Benefits 16,966 14,529
     
Total Employee Benefits 241,039 244,035

At 30 June 2016, the Directorate employed 6,270 full time equivalent (FTE) staff. There were 6,092 FTE staff at 30 June 2015. The increase in staff numbers is for growth in services in acute services including emergency department and additional elective surgery, mental health, outpatient, community and primary care services and women and children’s health.

  1. The increase is mainly due to the impact of collective agreement pay rises, an increase in staff numbers for growth in services in acute services including emergency department and additional elective surgery, mental health, outpatient, community and primary care services and women and children’s health and an increase in liability as leave accumulated exceeded the leave taken in 2015-16.
  2. The increase is mainly due to an increase in the rate used to estimate the present value of future long service leave payments from 104.2% to 114.7% ($11.7 million), collective agreement pay rises ($3.2 million), an increase in staff numbers and growth in liability due to the leave accumulated exceeding leave taken ($6.5 million) in 2015-16.
  3. 2014-15 included 9 days accrued salaries compared to one day accrual in 2015-16. 2014-15 also included pay rises accrued for Medical staff whose collective agreements were finalised in 2015-16.
Estimate of when Leave is Payable 2016
$'000
2015
$'000
Estimated Amount Payable within 12 months    
Annual Leave 59,527 54,021
Long Service Leave 8,685 7,312
Accrued Salaries 3,436 34,281
Other Benefits 38 210
Total Employee Benefits Payable within 12 months 71,687 95,824
Estimated Amount Payable after 12 months    
Annual Leave 44,836 43,776
Long Service Leave 124,516 104,435
Total Employee Benefits Payable after 12 months 169,352 148,211
     
Total Employee Benefits 241,039 244,035

Note 35. Other Liabilities

  2016
$'000
2015
$'000
Current Other Liabilities    
Revenue Received in Advance 252 370
Total Current Other Liabilities 252 370
     
Total Other Liabilities 252 370

Note 36. Equity

Asset Revaluation Surplus

The Asset Revaluation Surplus is used to record the increments and decrements in the value of property, plant and equipment.

  2016
$'000
2015
$'000
Balance at the Beginning of the Reporting Period 129,428 129,518
Increment/(Decrement) in Land due to Revaluation 760 (90)
Increment in Buildings due to Revaluation 844 -
Total Increase/(Decrease) in the Asset Revaluation Surplus 1,604 (90)
Balance at the End of the Reporting Period 131,032 129,428

Note 37. Financial Instruments

Details of the significant policies and methods adopted, including the criteria for recognition, the basis of measurement, and the basis on which income and expenses are recognised, with respect to each class of financial asset and financial liability are disclosed in Note 2: Significant Accounting Policies.

Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The Directorate does not hold any financial liabilities with floating interest rates, therefore the Directorate is not exposed to movements in interest payable. The Directorate is, however, exposed to movements in interest rates on amounts held in Cash at Bank.

Interest rate risk for financial assets is managed by the Directorate by only investing in floating interest rate investments that are low risk. There have been no changes in risk exposure or processes for managing risk since last financial reporting period.

A sensitivity analysis has not been undertaken as it is considered that the Directorate's exposure to this risk is insignificant and would have an insignificant impact on the financial results.

Credit Risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Directorate’s credit risk is limited to the amount of the financial assets it holds net of any allowance for impairment. The Directorate expects to collect all financial assets that are not past due or impaired.

Credit risk is managed by the Directorate for cash at bank by holding bank balances with the ACT Government’s banker, Westpac Banking Corporation (Westpac). Westpac holds a AA- issuer credit rating with Standard and Poors. An AA- credit rating is defined as ‘very strong capacity to meet financial commitments’.

Credit risk is managed by the Directorate for investments by only investing surplus funds with the Territory Banking Account, which has appropriate investment criteria for the external fund manager engaged to manage the Territory's surplus funds.

The Directorate's receivables are predominantly from ACT Government, Commonwealth Government and insurance companies for compensable patients. As the Commonwealth Government has a AAA credit rating, it is considered that there is a very low risk of default for those receivables.

There has been no change in credit risk exposure since last reporting period.

Liquidity Risk

Liquidity risk is the risk that the Directorate will encounter difficulties in meeting obligations associated with financial liabilities that are settled by delivering cash or other financial assets. The Directorate's financial obligations relate to the payment of grants and the purchase of supplies and services. Grants are paid on a quarterly basis and purchases of supplies and services are paid within 30 days of receiving the goods or services.

The main source of cash to pay these obligations is user charges revenue from the ACT Local Health Network Directorate and appropriation from the ACT Government which is paid on a fortnightly basis during the reporting period. The Directorate manages its liquidity risk through forecasting appropriation drawdown requirements to enable payment of anticipated obligations. See the maturity analysis provided later in this note for further details of when financial assets and liabilities mature.

The Directorate's exposure to liquidity risk is considered insignificant based on experience from prior reporting periods and the current assessment of risk.

Price Risk

Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether these changes are caused by factors specific to the individual financial instrument or its issuer, or by factors affecting all similar financial instruments traded into the market. The only price risk the Directorate is exposed to results from its investment in the Cash Enhanced Fund. The Directorate has units in the Cash Enhanced Fund that fluctuate in value. The price fluctuation in the units of the portfolio is caused by movements in the underlying investments of the portfolio. The underlying investments are managed by an external fund manager who invests in a variety of different securities, including bonds issued by the Commonwealth Government, the State Government guaranteed treasury corporations and semi-government authorities, as well as investment‑grade corporate issues.

The Directorate's exposure to price risk and the management of this risk has not changed since the last reporting period.

A sensitivity analysis has not been undertaken for the price risk of the Directorate as it has been determined that the possible impact on profit and loss or total equity from fluctuations in price is immaterial.

Fair Value of Financial Assets and Liabilities

The carrying amounts and fair values of financial assets and liabilities at the end of the reporting period are:

  Note
No.
Carrying
Amount
2016
$'000
Fair Value
Amount
2016
$'000
Carrying
Amount
2015
$'000
Fair Value
Amount
2015
$'000
Financial Assets          
Cash and Cash Equivalents 23 106,575 106,575 105,069 105,069
Receivables 24 35,357 35,357 23,610 23,610
Investment with the Territory Banking Account 26 >3,019 3,019 3,027 3,027
Total Financial Assets   144,951 144,951 131,706 131,706
           
Financial Liabilities          
Payables 31 91,654 91,654 54,269 54,269
ACT Government Borrowings 32 3,271 3,271 - -
Total Financial Liabilities   94,925 94,925 54,269 54,269

Fair Value Hierarchy

The carrying amount of financial assets measured at fair value, as well as the methods used to estimate the fair value are summarised in the table below. All other financial assets and liabilities are measured, subsequent to initial recognition, at amortised cost and as such are not included in the table below.

2016 Classification According to the Fair Value Hierarchy
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
Financial Assets        
Investment with the Territory Banking Account - Cash Enhanced Fund - 3,019 - 3,019
Total Financial Assets - 3,019 - 3,019
         
2015 Classification According to the Fair Value Hierarchy
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
Financial Assets        
Investment with the Territory Banking Account - Cash Enhanced Fund - 3,027 - 3,027
Total Financial Assets - 3,027 - 3,027
         
Transfer Between Categories        
There have been no transfers of financial assets or liabilities between Level 1 and Level 2 during the current and previous reporting periods.

The following table sets out the Directorate’s maturity analysis for financial assets and liabilities as well as the exposure to interest rates, including the weighted average interest rates by maturity period at 30 June 2016. Except for non-current payables, financial assets and liabilities which have a floating interest rate or are non-interest bearing will mature in 1 year or less. All amounts appearing in the following maturity analysis are shown on an undiscounted cash flow basis.

  Note
No.
Weighted
Average
Interest
Rate
Floating
Interest
'000
Fixed Interest Maturing In: Non-
Interest
Bearing
$'000
Total
$'000
1 Year
or Less
$'000
Over 1
Year to 5
Years
$'000
Over
5 Years
$'000
Financial Instruments                
 
Financial Assets                
Cash and Cash Equivalents 23   - - - - 106,575 106,575
Receivables 24   - - - - 35,358 35,358
Investments with the Territory Banking Account 26 2.51% 3,019 - - - - 3,019
Total Financial Assets     3,019 - - - 141,933 144,952
 
Financial Liabilities                
Payables 31   - - - - 91,654 91,654
Borrowings 32 5.62% - - - - 3,271 3,271
Total Financial Liabilities     - - - - 94,925 94,925
 
Net Financial Assets     3,019 - - - 47,008 50,027

The following table sets out the Directorate’s maturity analysis for financial assets and liabilities as well as the exposure to interest rates, including the weighted average interest rates by maturity period at 30 June 2015. Financial assets and liabilities which have a floating interest rate or are non-interest bearing will mature in 1 year or less. All amounts appearing in the following maturity analysis are shown on an undiscounted cash flow basis.

  Note
No.
Weighted
Average
Interest
Rate
Floating
Interest
'000
Fixed Interest Maturing In: Non-
Interest
Bearing
$'000
Total
$'000
1 Year
or Less
$'000
Over 1
Year to 5
Years
$'000
Over
5 Years
$'000
Financial Instruments                
 
Financial Assets                
Cash and Cash Equivalents 23   - - - - 105,069 105,069
Receivables 24   - - - - 23,610 23,610
Investments with the Territory Banking Account 26 3.10% 3,027 - - - - 3,027
Total Financial Assets     3,027 - - - 128,679 131,706
 
Financial Liabilities                
Payables 31   - - - - 54,269 54,269
Total Financial Liabilities     - - - - 54,269 54,269
 
Net Financial Assets     3,027 - - - 74,410 77,437

 

Carrying Amount of Each Category of Financial Asset and Financial Liability 2016
$'000
2015
$'000
Financial Assets    
Loans and Receivables Measured at Amortised Cost 35,357 23,610
Financial Assets at Fair Value through the Profit and Loss Designated upon Initial Recognition 3,019 3,027
Financial Liabilities    
Financial Liabilities Measured at Amortised Cost 94,925 54,269
     
Gains/(Losses) on Each Category of Financial Asset and Financial Liability    
     
Gains/(Losses) on Financial Assets    
Financial Assets at Fair Value through the Profit and Loss Designated upon Initial Recognition (8) 97

Note 38. Commitments

Capital Commitments

Capital commitments, contracted at reporting date, include the construction of new buildings such as the Secure Mental Health Unit, University of Canberra Public Hospital and Ngunnawal Bush Healing Farm, as well as infrastructure works across the Canberra Hospital campus, computer software development and upgrades to existing ACT Health assets. These have not been recognised as liabilities.

  2016
$'000
2015
$'000
Capital Commitments - Property, Plant and Equipment    
Payable:    
Within one yeara 200,091 179,753
Later than one year but not later than five yearsa 110,815 61,455
Total Capital Commitments - Property, Plant and Equipment 310,906 241,208
Total Capital Commitments 310,906 241,208
  1. The increase is due to capital works that will be continuing for 2016-17 through to 2018-19 including the construction of new buildings such as the Secure Mental Health Unit, University of Canberra Public Hospital and Ngunnawal Bush Healing Farm and various other asset upgrades and infrastructure works across the Directorate.

Operating Lease Commitments

The Directorate has several non-cancellable operating leases for buildings and computer assets.

  2016
$'000
2015
$'000
Non-cancellable operating commitments are as follows:    
Within one yeara 8,147 6,940
Later than one year but not later than five years a 26,459 22,779
Later than five years 512 249
Total Operating Lease Commitments 35,118 29,968
  1. The increase in operating commitments is due to inflation and an increase in the number of computer assets leased.

Other Commitments

Other commitments contracted at reporting date mainly relate to grants to Non-Government Organisations that have not been recognised as liabilities.

  2016
$'000
2015
$'000
Non-cancellable other commitments are as follows:    
Within one year 43,762 49,993
Later than one year but not later than five yearsb 83,591 110
Total Other Commitments 127,353 50,103
  1. The increase in other commitments is due to the renewal of contracts with non-government organisations in the areas of Aboriginal health, primary health, sexual health, women and children’s health, multicultural health, and drug and alcohol for work commencing from July 2016 for a three‑year period.

Operating Lease Commitments - Motor Vehicles

Due to a change in the Whole-of-Government car leasing arrangements with SG Fleet on 23 April 2015, all such leases for the Directorate are now classified as operating leases rather than finance leases.

  2016
$'000
2015
$'000
Non-cancellable other commitments are payable as follows:    
Within one yearc 1,842 2,471
Later than one year but not later than five years 1,115 2,200
Total Operating Lease Commitments - Motor Vehicle 2,957 4,671
  1. The reduction in motor vehicle commitments is due to a combination of factors, current year commitments is for less number of years than in 2014-15 and the Directorate has less vehicles than in previous year.

Note 39. Contingent Liabilities and Contingent Assets

Contingent Liabilities

The Directorate is subject to 143 legal actions (2015 - 137 actions). The Directorate’s maximum exposure under the ACT Insurance Authority insurance policy is estimated at $5,840,705 at 30 June 2016 (30 June 2015 - $6,150,000), which has not been provided for in the accounts.

There were no contingent assets at 30 June 2016.

Note 40. Cash Flow Reconciliation

(a). Reconciliation of Cash and Cash Equivalents at the End of the Reporting Period in the Cash Flow Statement to the Equivalent Items in the Balance Sheet

  2016
$'000
2015
$'000
Cash and Cash Equivalents Disclosed in the Balance Sheet 106,575 105,069
Cash and Cash Equivalents at the End of the Reporting Period as Recorded in the Cash Flow Statement 106,575 105,069

(b). Reconciliation of the Operating (Deficit) to the Net Cash Inflows/(Outflows) from Operating Activities

  2016
$'000
2015
$'000
Operating (Deficit) (62,336) (44,630)
Add/(Less) Non-Cash Items    
Depreciation of Property, Plant and Equipment 30,012 36,396
Amortisation of Intangibles 12,956 10,190
Bad and Doubtful Debts 2,315 2,026
Asset Book Value Written Down 6,762 837
Impairment Loss of Non-Current Assets 247 217
Assets transferred from Other ACT Government Entities (200) (485)
Net Gain on Disposal of Non-Current Assets (64) -
Unrealised Gain on Investments - (12)
Gain from Derecognition of Finance Lease Liability - (5,469)
Loss on Derecognition of Motor Vehicles under a Finance Lease - 5,286
Cash Before Changes in Operating Assets and Liabilities (10,308) 4,356
Changes in Operating Assets and Liabilities    
(Increase) in Receivables (11,529) (3,774)
(Increase) in Inventories (1,451) (849)
(Increase) in Other Assets (65) (548)
Increase in Payables 11,728 6,095
(Decrease)/Increase in Employee Benefits (2,996) 22,027
(Decrease) in Other Liabilities (118) (154)
Net Changes in Operating Assets and Liabilities (4,431) 22,797
       
Net Cash(Outflows)/Inflows from Operating Activities (14,739) 27,154

(c). Non-Cash Financing and Investing Activities

Due to a change in the whole of Government vehicle leasing arrangements with SG Fleet, from 23 April 2015 all such leases for the Directorate are classified as operating leases rather than finance leases.

  2016
$'000
2015
$'000
Acquisition of Plant and Equipment by means of Finance Leases - 1,703

Note 41. Events Occurring After Balance Date

There were no events occurring after the balance date, which would affect the financial statements as at 30 June2016, or in future reporting periods.

Note 42. Third Party Monies

The Directorate held funds in trust relating to the activities of the Health Directorate Human Research Ethics Committee.

  2016
$'000
2015
$'000
Human Research Ethics Committee Account    
Balance at the Beginning of the Reporting Period 492 517
Cash Receipts 549 855
Cash Payments (699) (880)
Balance at the End of the Reporting Period 342 492
The Directorate held funds in trust relating to residents of its Mental Health Facilities.
  2016
$'000
2015
$'000
Mental Health Account    
Balance at the Beginning of the Reporting Period 43 33
Cash Receipts 91 111
Cash Payments (99) (101)
Balance at the End of the Reporting Period 35 43
     
The Directorate held funds relating to the activities of Salaried Specialists.
  2016
$'000
2015
$'000
Private Practice Fund    
Balance at the Beginning of the Reporting Period 28,510 26,497
Cash Receipts 22,304 27,672
Cash Payments (24,395) (25,659)
Balance at the End of the Reporting Period 26,419 28,510

Note 43. Budgetary Reporting - Explanations of Major Variances Between Actual Amounts and Original Budget Amounts

The following are brief explanations of major line item variances between budget estimates and actual outcomes. Variances are considered to be major variances if both of the following criteria are met:

  1. The line item is a significant line item: the line item actual amount accounts for more than 10% of the relevant associated category (Income, Expenses and Equity totals) or sub-element (e.g. Current Liabilities and Receipts from Operating Activities totals) of the financial statements; and
  2. The variances (original budget to actual) are greater than plus (+) or minus (-) 10% of the budget for the financial statement line item.
  Actual
2015-16
$'000
Original
Budget1
2015-16
$'000
Variance
$'000
Variance
%
Variance Explanations
Operating Statement Line Items
User Charges - Non-ACT Government 124,780 107,222 17,558 16 Higher than budgeted user charges is mainly due to higher than expected Commonwealth high cost drugs reimbursements as a result of the inclusion of additional drugs that qualify for the Commonwealth reimbursements.
Increase in the Asset Revaluation Surplus 1,604 - 1,604 100 This relates to Woden Valley Childcare Centre land and building revaluation, which was recorded this year. This was not known at the time of budget setting.

1 Original Budget refers to the amounts presented to the Legislative Assembly in the original budgeted financial statements in respect of the reporting period (2015-16 Budget Statements).  These amounts have not been adjusted to reflect supplementary appropriation or appropriation instruments.

Balance
Sheet Line
Items
Actual
2015-16
$'000
Original
Budget1
2015-16
$'000
Variance
$'000
Variance
%
Variance Explanations
Cash and Cash Equivalents 106,575 60,743 45,832 75 Higher than budgeted cash and cash equivalents is largely due to higher than budgeted opening cash balance of $40 million which  relates to cash drawn in June 15 for pay rises and accrued salaries that were settled in 2015-16. Capital works funding of $24million received in June 16 were not settled until July 16 also have contributed to this variance. These were partially offset by lower net cash flow from operating activities $19 million.
Receivables 38,761 29,591 9,170 31 Higher than budgeted receivables mainly relates to $5.5 million of activity based funding owed by the ACT Local Hospital Network Directorate and an increase in receivable associated with Commonwealth reimbursement for high cost drugs $3 million.
Capital Works in Progress 168,175 205,995 (37,820) (18) Lower than budgeted capital works in progress is due to project delays mainly for the following projects:
  • Secure Mental Health Unit construction due to higher rainfall than average;
  • Computer software development projects due to lengthy contract negotiations;
  • Infrastructure and redevelopment works across the Canberra Hospital campus; and
  • ACT Health’s capital upgrade program which includes building upgrades, electrical, fire and safety upgrades as well as mechanical and services infrastructure upgrades.
Payables 91,654 43,048 48,606 113 Higher than budgeted payables mainly relates to higher number of invoices for capital works ($33 million) and operating expense ($16 million) received late in the year.
Statement of Changes in Equity
These line items are covered in other financial statements

1 Original Budget refers to the amounts presented to the Legislative Assembly in the original budgeted financial statements in respect of the reporting period (2015-16 Budget Statements). These amounts have not been adjusted to reflect supplementary appropriation or appropriation instruments.

Cash Flow
Statement
Line Items
Actual
2015-16
$'000
Original
Budget1
2015-16
$'000
Variance
$'000
Variance
%
Variance Explanations
User Charges - Non-ACT Government 115,766 105,000 10,766 10 Higher than budgeted user charges - non-ACT Government is mainly due to higher than expected Commonwealth high cost drugs reimbursements as a result of the introduction of additional drugs that qualify for the Pharmaceutical Benefits Scheme.
Proceeds from the Sale of Property, Plant and Equipment 64 - 64 100 This mainly relates to proceeds from the sale of motor vehicles that came off lease in June 2015 and sold at the beginning of 2015-16. As all motor vehicles are now under operating lease. No sales proceeds were anticipated, hence not budgeted.
Payments for Capital Works 114,209 166,147 (51,938) (31) Lower than budgeted payments for capital works was mainly due to later than expected invoice payments as large amounts were accrued at year end and project delays mainly for the following projects:
  • Secure Mental Health Unit construction due to higher than average rainfall;
  • Computer software development projects due to lengthy contract negotiations;
  • Infrastructure and redevelopment works across the Canberra Hospital campus; and
  • ACT Health’s capital upgrade program which includes building upgrades, electrical, fire and safety upgrades as well as mechanical and services infrastructure upgrades.
Capital Injections 138,299 166,147 (27,848) (17) Capital injections were lower than the budget mainly due to delays in the projects listed above.

1 Original Budget refers to the amounts presented to the Legislative Assembly in the original budgeted financial statements in respect of the reporting period (2015-16 Budget Statements).  These amounts have not been adjusted to reflect supplementary appropriation or appropriation instruments.

Territorial Financial Statements
For the Year Ended
30 June 2016

Health Directorate

  Note
No.
Actual
2016
$'000
Original
Budget
2016
$'000
Actual
2015
$'000

Income

 

 

 

 

Revenue

 

 

 

 

Payments for Expenses on Behalf of the Territory

45

1,213

9,236

6,684

Fees

46

1,595

1,308

1,268

Total Revenue

 

2,808

10,544

7,952

Total Income

 

2,808

10,544

7,952

 

 

 

 

 

Expenses

 

 

 

 

Grants and Purchased Services

47

1,176

9,236

6,684

Transfer to Government

48

1,587

1,308

1,267

Total Expenses

 

2,763

10,544

7,951

 

 

 

 

 

Total Comprehensive Surplus

 

45

-

1

 

 

 

 

 

The above Statement of Income and Expenses on Behalf of the Territory should be read in conjunction with the accompanying notes.

The funds which flow through the Directorate’s Territorial accounts are the receipt of regulatory licence fees and the receipt and on-passing of monies for capital works at the Calvary Public Hospital.

  Note
No.
Actual
2016
$'000
Original
Budget
2016
$'000
Actual
2015
$'000
Current Assets        
Cash and Cash Equivalents 49 349 268 242
Receivables 50 - 35 112
Total Current Assets   349 303 354
Total Assets   349 303 354
         
Non-Current Liabilities        
Advance from the Territory Banking Account 51 300 300 350
Total Liabilities   300 300 350
         
Net Assets   49 3 4
         
Equity        
Accumulated Funds   49 - 4
Total Equity   49 - 4
The above Statement of Assets and Liabilities on Behalf of the Territory should be read in conjunction with the accompanying notes.
  Accumulated
Funds
Actual
2016
$'000
Total
Equity
Actual
2016
$'000
Original
Budget
2016
$'000
Balance at 1 July 2015 4 4 3
       
Comprehensive Income      
Operating Surplus 45 45 -
Total Comprehensive Income 45 45 -
       
Balance at 30 June 2016 49 49 3

The above Statement of Changes in Equity on Behalf of the Territory should be read in conjunction with the accompanying notes.

  Accumulated
Funds
Actual
2016
$'000
Total
Equity
Actual
2016
$'000
Original
Budget
2016
$'000
Balance at 1 July 2014 3 3 -
       
Comprehensive Income      
Operating Surplus 1 1 -
Total Comprehensive Income 1 1 -
       
Balance at 30 June 2015 4 4 -

The above Statement of Changes in Equity on Behalf of the Territory should be read in conjunction with the accompanying notes.

  Note
No.
Actual
2016
$'000
Budget
2016
$'000
Actual
2015
$'000
Cash Flows from Operating Activities        
         
Receipts        
Cash from Government for Expenses on Behalf of the Territory   1,213 9,236 6,684
Fees   1,595 1,308 1,268
Other Receipts   112 924 704
Total Receipts from Operating Activities   2,920 11,468 8,656
         
Payments        
Grants and Purchased Services   1,226 9,236 6,635
Transfer of Territory Receipts to the ACT Government   1,587 1,308 1,267
Other   - 924 780
Total Payments from Operating Activities   2,813 11,468 8,682
Net Cash Inflows/(Outflows) from Operating Activities 52 107 - (26)
         
Net Increase/(Decrease) in Cash and Cash Equivalents   107 - (26)
Cash and Cash Equivalents at the Beginning of the    Reporting Period   242 268 268
Cash and Cash Equivalents at the End of the Reporting Period 52 349 268 242

The above Cash Flow Statement on Behalf of the Territory should be read in conjunction with the accompanying notes.

  Original
Budget
2016
$'000
Total
Appropriated
2016
$'000
Appropriated
Drawn
2016
$'000
Appropriated
Drawn
2015
$'000
Territorial        
Expenses on Behalf of the Territory 9,236 9,871 1,213 6,684
Total Territorial Appropriation 9,236 9,871 1,213 6,684
The above Territorial Statement of Appropriation should be read in conjunction with the accompanying notes.

Column Heading Explanations

The Original Budget column shows the amounts that appear in the Cash Flow Statement in the Budget Papers.

The Total Appropriated column is inclusive of all appropriation variations occurring after the Original Budget.

The Appropriation Drawn is the total amount of appropriation received by the Directorate during the reporting period. These amounts appear in the Cash Flow Statement on Behalf of the Territory.

Variances between ‘Original Budget’ and ‘Total Appropriated’

The difference between the Original Budget and Total Appropriated mainly relates to project delays in 2014 15 capital works for the upgrade of clinical areas at Calvary Public Hospital.

Variances between ‘Total Appropriated’ and ‘Appropriation Drawn’

The difference between Total Appropriated and Appropriation Drawn mainly relates to delays in capital works projects at Calvary Public Hospital mainly relating to operating theatre upgrades, expansion of services to enable 8 additional beds and upgrade of medical imaging equipment.

Health Directorate
Territorial Note Index
For the Year Ended 30 June 2016

Note 44 Significant Accounting Policies - Territorial
Revenue Notes
Note 45 Payment for Expenses on behalf of the Territory - Territorial
Note 46 Fees Territorial
Expenses Notes
Note 47 Grants and Purchased Services - Territorial
Note 48 Transfer to Government Territorial
Assets Notes
Note 49 Cash and Cash Equivalents - Territorial
Note 50 Receivables Territorial
Liabilities Note
Note 51 Advance from the Territory Banking Account - Territorial
Other Notes
Note 52 Cash Flow Reconciliation - Territorial
Note 53 Financial Instruments - Territorial
Note 54 Commitments - Territorial
Note 55 Contingent Liabilities and Contingent Assets - Territorial
Note 56 Events Occurring after Balance Date - Territorial
Note 57 Budgetary Reporting - Territorial - Explanation of Major Variances between Actual Amounts and Original Budget Amounts

Note 44. Significant Accounting Policies - Territorial

The Directorate’s accounting policies are contained in Note 2:  Summary of Significant Accounting Policies.  The policies outlined in Note 2 apply to both the Controlled and Territorial financial statements.

Note 45. Payment for Expenses on Behalf of the Territory - Territorial

Under the Financial Management Act 1996, funds can be appropriated for expenses incurred on behalf of the Territory.  The Directorate receives this appropriation to fund a number of expenses incurred on behalf of the Territory, being on-passing of appropriated funds for capital funding for Calvary Public Hospital.

(See Note 47: Grants and Purchased Services – Territorial)

  2016
$'000
2015
$'000
Payment for Expenses on Behalf of the Territorya 1,213 6,684
Total Payment for Expenses on Behalf of the Territory 1,213 6,684
  1. The decrease is due to the delays in capital works program at the Calvary Public Hospital mainly relating to operating theatre upgrades, expansion of services to enable 8 additional beds and upgrade of medical imaging equipment.

Note 46. Fees - Territorial

Fee refers to the collection of licence fees, including from food businesses, smoke free places, boarding houses and radiation equipment.

  2016
$'000
2015
$'000
Fees    
Fees for Regulatory Services 1,595 1,268
Total Fees 1,595 1,268

 

  1. The increase is mainly due to businesses using the new option to pay regulatory fees for multiple years (28% of businesses have paid for 2-3 year licences). Current receipting system does not cater for calculating how much regulatory fees were received in advance. Therefore Regulatory fees are recognised in the year the revenue is received.

Note 47. Grants and Purchased Services - Territorial

Grants are amounts provided by the Directorate, to ACT Government entities and non-ACT Government entities for general assistance or for a particular purpose. Grants may be for capital, current or recurrent purposes and the name or category reflects the use of the grant.  The grants given are usually subject to terms and conditions set out in a contract, correspondence, or by legislation.

  2016
$'000
2015
$'000
Capital Grants to External Parties - Calvary Public Hospitala 1,176 6,684
Total Grants and Purchased Services 1,176 6,684
  1. The decrease is due to the delays in capital works program at the Calvary Public Hospital mainly relating to operating theatre upgrades, expansion of services to enable 8 additional beds and upgrade of medical imaging equipment.

Note 48. Transfer to Government - Territorial

Transfer to Government represents the transfer of money, which the Directorate has collected on behalf of the Territory, to Government.  The money collected by the Directorate on behalf of the Territory includes licence fees collected.

  2016
$'000
2015
$'000

Transfers to the Territory Banking Accounta

1,587

1,267

Total Transfer to Government 1,587 1,267

Note 49. Cash and Cash Equivalents - Territorial

The Directorate holds one Territorial bank account. Interest is not earned on cash at bank held in the Territorial Bank Account.

  2016
$'000
2015
$'000
Cash at Bank 349 242
Total Cash and Cash Equivalents 349 242

Note 50. Receivables - Territorial

  2016
$'000
2015
$'000
Current Receivables    
Net Goods and Services Tax Receivable - 112
Less: Allowance for Impairment Losses - -
Total Current Receivables - 112
Total Receivables - 112

 

Ageing of Receivables Not Overdue
$'000
Overdue Total
$'000
Less than
30 Days
$'000
30 to
60 Days
$'000
Greater
than 60
Days
$'000
2016
Not Impaired Receivables - - - - -
Impaired Receivables - - - - -
           
2015
Not Impaired Receivables 112 - - - 112
Impaired Receivables - - - - -

 

Classification of Non-ACT Government Receivables 2016
$'000
2015
$'000

Receivables with Non-ACT Government Entities

 

 

Net Goods and Services Tax Receivable

-

112

Total Receivables with Non-ACT Government Entities

-

112

 

 

 

Total Receivables

-

112

Note 51. Advance from the Territory Banking Account - Territorial

  2016
$'000
2015
$'000
Advance from the Territory Banking Account 300 350
Total Advance from the Territory Banking Account 300 350

This cash advance is for the purpose of funding the Goods and Services Tax (GST) cash outlay due to timing difference between the GST payment and receiving of refunds from the Australian Taxation Office. Capital upgrades funds transferred to Calvary Public Hospital attracts GST, which is not appropriated.

Note 52. Cash Flow Reconciliation - Territorial

(a) Reconciliation of Cash and Cash Equivalents at the end of the Reporting Period in the Cash Flow Statement on Behalf of the Territory to the Related Items in the Statement of Assets and Liabilities on Behalf of the Territory.

  2016
$'000
2015
$'000
Total Cash Disclosed on the Statement of Assets and Liabilities on Behalf of the Territory 349 242
Cash at the End of the Reporting Period as Recorded in the Cash Flow Statement on Behalf of the Territory 349 242

(b) Reconciliation of the Operating Surplus to Net Cash Inflows/(Outflows) from Operating Activities

  2016
$'000
2015
$'000
Operating Surplus 45 1
Cash Before Changes in Operating Assets and Liabilities 45 1
     
Changes in Operating Assets and Liabilities    
Decrease/(Increase) in Receivables 112 (77)
(Decrease)/Increase in Advance from the Territory Banking Account (50) 50
Net Changes in Operating Assets and Liabilities 62 (27)
     
Net Cash Inflows/(Outflows) from Operating Activities 107 (26)

Note 53 Financial Instruments - Territorial

Details of the significant policies and methods adopted, including the criteria for recognition, the basis of measurement, and the basis on which income and expenses are recognised, with respect to each class of financial asset and financial liability are disclosed in Note 44: Significant Accounting Policies - Territorial.

Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The Directorate has all Territorial financial assets and financial liabilities held in non interest bearing arrangements.  This means that the Directorate is not exposed to movements in interest rates, and, as such does not have interest rate risk.

Therefore a sensitivity analysis has not been undertaken.

Credit Risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss.  The Directorate’s credit risk is limited to the amount of the financial assets held less any allowance for impairment losses.

The Directorate’s Territorial financial assets only consist of Cash and Cash Equivalents.

Credit risk to Cash and Cash Equivalents is managed by the Directorate by holding bank balances with the ACT Government’s banker, Westpac Banking Corporation (Westpac). Westpac holds a AA- issuer credit rating with Standard and Poors.

Liquidity Risk

Liquidity risk is the risk that the Directorate will be unable to meet its financial obligations as they fall due. The Directorate’s only Territorial financial obligation relates to an advance received from the Territory Banking Account where there is no requirement to repay the advance within the next twelve months.  The Directorate’s exposure to liquidity risk is therefore insignificant.

Price Risk

Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices, whether these changes are caused by factors specific to the individual financial instrument or its issuer, or by factors affecting all similar financial instruments traded in the market.

The Directorate holds no investments on behalf of the Territory that are subject to price risk and as a result, is not considered to have any price risk. Accordingly, a sensitivity analysis has not been undertaken.

Fair Value of Financial Assets and Liabilities

The carrying amounts and fair values of financial assets and liabilities at balance date are:

  Note Carrying
Amount
2016
$'000
Fair
Value
2016
$'000
Carrying
Amount
2015
$'000
Fair
Value
2015
$'000
Financial Assets
Cash and Cash Equivalents 49 349 349 242 242
Total Financial Assets   349 349 242 242
           
Financial Liabilities          
Advance from the Territory Banking Account 51 300 300 350 350
Total Financial Liabilities   300 300 350 350
           
Net Financial Assets/(Liabilities)   49 49 (108) (108)

The following table sets out the Directorate’s maturity analysis for financial assets and liabilities as well as the exposure to interest rates, including the weighted average interest rates by maturity period at 30 June 2016. All financial assets and liabilities, excluding Advance from the Territory Banking Account, which are non-interest bearing will mature in 1 year or less. All amounts appearing in the following maturity analysis are shown on an undiscounted cash flow basis.

  Note
No.
Weighted
Average
Interest
Rate
Floating
Interest
Rate
$'000
Fixed Interest Maturing In: Non-
Interest
Bearing
$'000
Total
$'000
1 Year
or Less
$'000
Over 1
Year
to 5 Years
$'000
Over
5 Years
$'000
Financial Instruments
                 
Financial Assets                
Cash and Cash Equivalents 49   - - - - 349 349
Total Financial Assets     - - - - 349 349
                 
Financial Liabilities                
Advance from the Territory Banking   Account 51   - - - - 300 300
Total Financial Liabilities     - - - - 300 300
                 
Net Financial Assets     - - - - 49 49

The following table sets out the Directorate’s maturity analysis for financial assets and liabilities as well as the exposure to interest rates, including the weighted average interest rates by maturity period at 30 June 2015. All financial assets and liabilities, excluding Advance from Territory Banking Account, which are non-interest bearing will mature in 1 year or less. All amounts appearing in the following maturity analysis are shown on an undiscounted cash flow basis.

  Note
No.
Weighted
Average
Interest
Rate
Floating
Interest
Rate
$'000
Fixed Interest Maturing In: Non-
Interest
Bearing
$'000
Total
$'000
1 Year
or Less
$'000
Over 1
Year
to 5 Years
$'000
Over
5 Years
$'000
Financial Instruments                
                 
Financial Assets                
Cash and Cash Equivalents 49   - - - - 242 242
Total Financial Assets     - - - - 242 242
                 
Financial Liabilities                
Advance from the Territory Banking Account 51   - - - - 350 350
Total Financial Liabilities     - - - - 350 350
                 
Net Financial (Liabilities)     - - - - (108) (108)

 

Carrying Amount of Each Class of Financial Asset and Financial Liability 2016
$'000
2015
$'000
Financial Liabilities    
Financial Liabilities Measured at Amortised Cost 300 350

Fair Value Hierarchy

The Directorate does not have any financial assets or financial liabilities on behalf of the Territory at fair value.  As such no Fair Value Hierarchy disclosures have been made.

Note 54. Commitments - Territorial

Capital Commitments

Capital commitments at reporting date that have not been recognised as liabilities are as follows:

  2016
$'000
2015
$'000
Capital Grant Commitments    
Within one yeara 21,403 1,076
Total Capital Commitments 21,403 1,076
     
All amounts shown in the commitment note are exclusive of Goods and Services Tax (GST).
  1. The increase in capital commitments is due to the construction of a new car park for the University of Canberra Public Hospital and ongoing works at Calvary Public Hospital for operating theatre upgrade, upgrade of medical imaging equipment, expanded hospital services and capital upgrades.

Note 55. Contingent Liabilities and Contingent Assets - Territorial

There were no contingent liabilities or contingent assets at 30 June 2016 (Nil at 30 June 2015).

There were no indemnities at 30 June 2016 (Nil at 30 June 2015).

Note 56. Events Occurring After Balance Date - Territorial

There were no events occurring after the balance date, which would affect the financial statements at 30 June 2016, or in future reporting periods.

Note 57. Budgetary Reporting - Territorial - Explanations of Major Variances Between Actual Amounts and Original Budget Amounts

The following are brief explanations of major line item variances between budget estimates and actual outcomes.  Variances are considered to be major variances if both of the following criteria are met:

  1. The line item is a significant line item:  the line item actual amount accounts for more than 10% of the relevant associated category (Income, Expenses and Equity totals) or sub-element (e.g. Current Liabilities and Receipts from Operating Activities totals) of the financial statements; and
  2. The variances (original budget to actual) are greater than plus (+) or minus (-) 10% of the budget for the financial statement line item.
Statement of Income
and Expenses on
Behalf of the Territory
Line Items
Actual
2015-16
$'000
Original
Budget1
2015-16
$'000
Variance
$'000
Variance
%
Variance Explanations
Payments for Expenses on Behalf of the Territory 1,213 9,236 (8,023) (86.9) Lower than budgeted revenue relates to delays in capital works projects at Calvary Public Hospital relating to operating theatre upgrades, expansion of services to enable 8 additional beds and upgrade of medical imaging equipment.
Fees 1,595 1,308 287 21.9 Higher than budgeted fees is mainly due to more businesses utilising the new option to pay regulatory fees for multiple years (28% of businesses have paid for 2-3 year licences).
Grants and Purchased Services 1,176 9,236 (8,060) (87.3) Lower than budgeted capital grants paid to Calvary Hospital relates to delayed projects for operating theatre upgrades, expansion of services to enable 8 additional beds and upgrade of medical imaging equipment.
Transfer to ACT Government 1,587 1,308 279 21.3 Higher than budgeted Transfer to ACT Government is associated with the fees revenue collected.

1Original Budget refers to the amounts presented to the Legislative Assembly in the original budgeted financial statements in respect of the reporting period (2015-16 Budget Statements). These amounts have not been adjusted to reflect supplementary appropriation or appropriation instruments.

Statement of Assets and
Liabilities on Behalf of
the Territory Line Items
Actual
2015-16
$'000
Original
Budget1
2015-16
$'000
Variance
$'000
Variance
%
Variance Explanations
Cash and Cash Equivalents 349 268 81 30.2 Higher than budgeted cash and cash equivalents is mainly due to net cash inflow from timing of payables and receivables.
Receivables - 35 (35) (100.0) Lower than budgeted receivables is due to the receipt of GST receivables earlier than budgeted.
Accumulated Funds 49 - 49 100.0 Higher than budgeted Accumulated Funds is mainly due to timing associated with transfer to Government payments.
Statement of Changes in Equity on Behalf of the Territory
These line items are covered in other financial statements

1Original Budget refers to the amounts presented to the Legislative Assembly in the original budgeted financial statements in respect of the reporting period (2015-16 Budget Statements). These amounts have not been adjusted to reflect supplementary appropriation or appropriation instruments.

Cash Flow Statement
on Behalf of the
Territory Line Items
Actual
2015-16
$'000
Original
Budget1
2015-16
$'000
Variance
$'000
Variance
%
Variance Explanations
Cash from the ACT Government for Expenses on Behalf of the Territory 1,213 9,236 (8,023) -86.9% Lower than budgeted cash from ACT Government mainly relates to delays in capital works projects at Calvary Public Hospital mainly relating to operating theatre upgrades, expansion of services to enable 8 additional beds and upgrade of medical imaging equipment.
Fees 1,595 1,308 287 21.9% Higher than budgeted fees is associated with businesses utilising the new option to pay regulatory fees for multiple years (28% of businesses have paid for 2-3 year licences).
Other Receipts 112 924 (812) -87.9% Lower than budgeted other receipts is due to lower GST refunds as a result of delays in capital works projects.
Grants and Purchased Services 1,226 9,236 (8,010) -86.7% Lower than budgeted grants and purchased services mainly relates to delays in capital works projects at Calvary Public Hospital mainly relating to operating theatre upgrades, expansion of services to enable 8 additional beds and upgrade of medical imaging equipment.
Transfer of Territory Receipts to the ACT Government 1,587 1,308 279 21.3% Higher than budgeted transfer to Territory receipts is associated with higher Fees revenue.

1 Original Budget refers to the amounts presented to the Legislative Assembly in the original budgeted financial statements in respect of the reporting period (2015-16 Budget Statements). These amounts have not been adjusted to reflect supplementary appropriation or appropriation instruments.